Oil demand in the world's top crude oil importer, China, is expected to decline by 1.2 million barrels per day (bpd) in April from a year ago-the largest hit to demand since the Wuhan lockdowns at the beginning of the pandemic, Bloomberg reported on Friday, quoting sources with inside knowledge of the Chinese energy industry.
China's gasoline, diesel, and jet fuel demand is set for a 20-percent plunge this month compared to the consumption in April 2021, Bloomberg's sources say, as authorities continue to pursue a "zero COVID" policy imposing strict lockdowns, including one that has been going for weeks for 26 million residents in the financial center Shanghai.
Gasoline demand is expected to be hit the worst, as millions of people are confined to their homes, while agricultural activities are partly offsetting the drop in diesel demand that comes from reduced trucking industry demand.
Mostly because of the Shanghai lockdown, demand for gasoline in eastern China has already plummeted by some 40 percent so far in April, Chinese oil executives told Bloomberg.
Shanghai authorities announced on Friday that they would tighten the already severe restrictions, including placing electronic door alarms to prevent COVID-infected people from leaving and evacuating people to disinfect their homes.
China's refiners are expected to lower their refinery runs in April at the biggest scale-by 900,000 bpd-since the beginning of the pandemic as new COVID-related lockdowns weigh on fuel consumption.
Last week, both OPEC and the International Energy Agency (IEA) cited weakened Chinese demand as a key factor-alongside the Russian war in Ukraine-in their reduced forecasts of global oil demand.
Oil demand is expected to average 99.4 million bpd this year, the IEA said, cutting its 2022 demand outlook by 260,000 bpd to reflect the return of severe lockdowns in China. OPEC also slashed its oil demand growth estimate for 2022 by nearly 500,000 bpd on the back of lower expected global economic growth with the Russian war in Ukraine and the return of COVID lockdowns in China.
By Tsvetana Paraskova for Oilprice.com
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Comments
Moreover, global oil demand in 2022 is expected to exceed 100 million barrels a day (mbd) judging by the continued robustness of the global economy.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London