We once thought that economic growth in China would led to huge increases in demand for oil as people bought and drove more cars, industry needed more energy and people took more planes to more places.
Jun 18, 2025 09:43On the back of these expectations, oil companies have invested billions of dollars in higher cost oil production in places like Kazakhstan and Brazil.
But as you can see in the chart below - taken from the IEA’s Oil Market Report published this week- things have not turned out as expected. Chinese demand for oil has plateaued and is likely to fall off materially in the next decade even as demand for transportation increases.
And that’s because of the growth in things like electric vehicles and electricified rail, powered by a grid where incremental output has been mainly supplied by renewables. And with geopolitical instability in many oil producing regions, this trend is likely to be reinforced.
You can reasonably foresee that where China has gone most other countries will follow and for the same reasons. This includes India.
If you were in Government in a high cost oil producing country you’d need to have an economic strategy to manage the risks and if you were in Government in an oil importing country you’d need a strategy to take advantage of lower cost energy from renewables.
