China’s Oil Demand Surge: What 2025 Holds for the Global Energy Market
Unpacking China’s Oil Demand Trends and Projections for 2025: Key Drivers and Market Impacts
Non-OECD China: The Future of Oil Demand in 2025 and Beyond
China – the world’s largest oil importer – is about to reshape global oil demand. If you're in the oil and gas industry, understanding China’s evolving energy landscape is non-negotiable. In this article, I dive into China’s oil demand trends for 2024 and offer a forward-looking forecast for 2025, powered by insights from OPEC’s February 2025 Monthly Report. From LPG to jet fuel, the demand shifts in China are critical for anyone invested in the global energy market.
A Big Surge: China’s Oil Demand in December 2024
In December 2024, China’s oil demand skyrocketed by 148 thousand barrels per day (tb/d) year-over-year (y-o-y) – a massive jump compared to the previous month’s increase of 93 tb/d y-o-y. But what’s behind this surge? Let’s break down the major players driving China’s oil consumption and what this means for 2025.
Key Products Driving the Demand Surge
LPG:
December: A stunning increase of 370 tb/d y-o-y
November: Growth of 83 tb/d y-o-y
LPG’s rise is directly tied to China’s booming petrochemical sector, where demand for feedstocks is soaring.
Other Products (bitumen, petroleum coke, lubricants):
December: Growth of 82 tb/d y-o/y
November: Growth of 62 tb/d y-o/y
These niche products, though smaller in volume, are critical for industries ranging from construction to manufacturing.
Jet/Kerosene:
December: Increase of 23 tb/d y-o/y (a slight dip from November)
November: Surge of 75 tb/d y-o/y
Despite a slight slowdown, the expansion of air travel is still a driving factor for jet fuel demand.
Gasoline:
December: Sharp decline of 120 tb/d y-o/y
November: Decline of 65 tb/d y-o/y
Gasoline has taken a hit as China shifts its focus to other fuels, but road transportation remains a crucial part of the demand picture.
Naphtha:
December: Decrease of 92 tb/d y-o/y
November: Down by 51 tb/d y-o/y
Naphtha demand is retreating, but it remains essential for petrochemical production.
Residual Fuels:
December: Decline of 81 tb/d y-o/y
November: 146 tb/d y-o/y
Residual fuels have been in steady decline since April 2024, signaling shifts in industrial demand.
Diesel:
December: Decline of 33 tb/d y-o/y
November: Growth of 135 tb/d y-o/y
Diesel’s demand is retreating after strong growth earlier in 2024, driven by changes in China’s industrial activities.
Looking Ahead: China’s Oil Demand in 2025
What’s in store for 2025? China’s oil demand is expected to rise by 328 tb/d y-o-y in Q1 2025, thanks to fiscal stimulus measures that will fuel consumption across various sectors. With a projected 9 billion passenger trips for the Lunar New Year, the demand for gasoline will skyrocket, and the construction boom is expected to push diesel consumption higher.
China’s Economic Boost: A Game-Changer for Global Oil Demand
Government fiscal measures are already showing results: in January 2025, gasoline crack spreads hit a five-month high, prompting Chinese refineries to increase production to meet the demand surge. But that's not all – fiscal stimulus will likely lead to higher household incomes, fueling domestic consumption even further. Additionally, a stabilizing housing market will encourage more spending.
Key Drivers of Oil Demand Growth in China
Petrochemical Sector: China is the global leader in petrochemical demand, and it’s expected to continue driving growth. By 2025, LPG/Ethane is projected to grow by 80 tb/d y-o-y as China’s petrochemical industry ramps up.
Jet/Kerosene: Air travel demand is booming, and jet/kerosene is expected to grow by 100 tb/d y-o-y due to the expansion of China’s air transportation infrastructure.
Gasoline and Diesel: Both fuels will see 60 tb/d y-o-y growth, supported by a healthy road transport sector and an improving construction industry.
Naphtha: Demand is expected to increase by 60 tb/d y-o-y, still significant as China powers forward with its industrial expansion.
Weak Areas: Residual Fuels & Other Products
However, not all segments will see growth. Residual fuels and "Other Products" (such as bitumen, lubricants) are projected to remain weak, with demand declining by 40 tb/d and 10 tb/d, respectively.
2025 Oil Demand Outlook for China
Overall, China’s oil demand is set to increase by 310 tb/d y-o-y, reaching an average of 17 million barrels per day (mb/d) in 2025. With fiscal stimulus, growing industrial demand, and a booming petrochemical sector, China will continue to play a pivotal role in shaping the global oil market. Keep your eye on China – the country’s energy needs will be a critical factor in the world’s oil landscape for years to come.
For more details, you can access OPEC’s February 2025 Monthly Oil Market Report here