China's Oil Peak: A New Era of Energy Transition

Sinopec projects China's oil consumption will peak by 2027 at 800 million metric tons as demand for diesel and gasoline slows. Influences include electric vehicles, LNG-fueled trucks, and geopolitical shifts. By 2060, the petrochemicals sector will dominate oil consumption. Natural gas consumption is expected to peak by 2030.

China is gearing up for a significant milestone with its oil consumption anticipated to reach a peak by 2027, as announced by Sinopec, the state refining behemoth, on Thursday. The waning demand for diesel and gasoline in the nation, the largest oil importer globally, has sent ripples through the international oil markets this year. Sinopec estimates the 2027 peak to cap at a maximum of 800 million metric tons, which translates to about 16 million barrels per day of crude oil.

Moreover, uncertainties loom ahead, particularly in 2025, with the return of Donald Trump as the President-elect in the White House, reigniting fears of escalating trade tensions and potential disruptions to Iranian oil exports, according to Wang Pei, the deputy general manager at the Sinopec Economics and Development Research Institute. Trump's potential bolstering of sanctions enforcement on Iran, a major exporter of approximately 1.5 million barrels of oil daily primarily to China, could add to these uncertainties.

The unexpected rapid transition towards peak oil in China has caught industries off guard, driven by the proliferation of electric vehicles and the rise of LNG-fueled trucks. Analysts predict China's crude imports could peak as early as 2025. As the demand for traditional fuel diminishes, the petrochemical sector is set to consume more oil than the transport sector by 2060, Sinopec reveals.

(With inputs from agencies.)