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Investing.com - China’s oil demand remains resilient despite the surge in electric vehicle sales over the past few years, said Barclays (LON:BARC), and a strong first half implies upside risks to the demand outlook.
“A potential peak in Chinese oil demand often comes up in conversations, but we think the concerns are likely overdone, as a closer look suggests demand is resilient,” said analysts at Barclays, in a note dated July 16.
The bank’s demand estimate for China averaged 17.2 million barrels a day in the first half of 2025, compared with 16.8m b/d in H1 2024 and 14.1m b/d in H1 19. Adjusted for pre-pandemic seasonality (2017-19), China’s oil demand was up 3.5m barrels a day in the first half.
“The 3.1 mb/d growth in China’s oil demand since H1 19 has come despite a sharp increase in EV uptake and a significant slowdown in broader activity in the country since 2019,” the bank added.
Over 22mn pure electric and 10mn plug-in hybrid vehicles have been sold in China since 2019, and the cumulative effect on demand has been close to half a million barrels per day, by our estimates, the bank said.
The IEA estimates electric vehicles have displaced about 0.45 mb/d of oil demand in China over the same period.
On the other hand, growth in the broader economy has slowed significantly since 2019 because of the downturn in property markets, which has also weighed on consumer sentiment, and demographic headwinds.
“We think the resilience in demand can be attributed to: a) the relatively low share of personal mobility in China’s oil demand, at ~20%; b) the lagged effect of surging new electric vehicle sales on total stock; c) growth in China’s share of global manufacturing activity despite trade tensions; and d) a slow but steady recovery in mobility, as reflected in robust civil aviation traffic growth,” Barclays said.
A payback of front-loading because of elevated trade tensions will likely weigh on demand in H2 25, and the bank expects activity to slow, but “we think the balance of risks to our 150 kb/d growth forecast for Chinese oil demand in 2025 is skewed higher.”