China, long regarded as a linchpin of the global oil market, is nearing a pivotal moment as experts project a potential peak in its oil demand by the end of this decade. The implications of such a shift raise questions about how global oil markets will adapt and diversify in the face of changing dynamics.

At a recent energy conference, Fereidun Fesharaki, Chairman of Facts Global Energy, highlighted the evolving landscape, stating, “For 20 years, the oil market is dependent on China, China, China, supporting the markets. The story is coming to an end.” Fesharaki predicted that China’s demand for oil could reach its zenith within the next three to five years.

Similarly, Wood Mackenzie, a prominent energy consultancy, echoes these sentiments, forecasting that China’s oil demand could peak by 2027, followed by an extended decline in crude demand. Shiqing Xia, an oil and chemicals consultant at Wood Mackenzie, emphasized China’s active pursuit of energy transition and the potential for a slower economic growth trajectory as key factors contributing to this projection.

The implications of China’s changing stance on oil demand are not limited to its own market. Experts believe that India and emerging economies in Southeast Asia could serve as a counterbalance to China’s anticipated decline in oil demand. India, in particular, is experiencing robust economic growth, with a 7.8% expansion in the quarter ending June, positioning itself as a potential growth center in the oil market.

Yaw Yan Chong, Director of LSEG Oil Research in Asia, envisions India overtaking China as the largest oil demand growth center toward the end of the decade. Chong noted that Asia’s growth engine for the next two decades will predominantly be driven by India and Southeast Asia.

However, it’s worth noting that not all experts are in agreement regarding the timeline of China’s oil demand peak. Yaw Yan Chong emphasized that China’s net-zero carbon emission goal by 2060 may extend the timeline for a significant reduction in crude oil demand, particularly as China witnesses “explosive” growth in electric vehicle adoption and continues to rely predominantly on coal for power generation.

Another voice in the discussion, Bob McNally, President of Rapidan Energy Group, posited that without substantial technological innovations or breakthroughs in renewable energy, China’s oil demand growth may continue for the next two to three decades, albeit at a potentially slower pace.

As the global energy landscape evolves, experts and industry observers will closely monitor China’s progress towards its energy transition goals and the ensuing impact on global oil markets.