The Strategist

Morgan Stanley: oil demand in China will peak in 2025

03/08/2019 - 05:05

Demand for oil in China will reach its peak level in 2025, that is, 5-8 years earlier than most analysts expect, according to Morgan Stanley.

Daniel Case
Daniel Case
Experts noted that such a forecast is based on uniqueness of the transport model implemented by the Chinese authorities.

While most countries with a fast-growing economy expect an increase in oil consumption due to an increase in demand for cars, electric cars are actively promoted in China, as well as high-speed rail lines, which will help reduce the demand for automobile fuel.

Realization of this forecast will mean major changes in the oil market, given that China has accounted for more than a third of global demand growth since 1999.

Bank of America and Royal Dutch Shell expect global oil demand to peak in the 2030s. against the background of active development of the electric car market.

“China will no longer be the engine of growth in global oil demand,” said Morgan Stanley analyst. “The losers will be the oil refining companies, and the producers of rechargeable batteries will be the winners”.

According to Morgan Stanley estimates, the level of penetration of electric vehicles into the Chinese market will reach 6.4% by the end of this decade and will rise up to 80% by 2040. In their opinion, the process may turn out to be even faster, given the active growth of local battery manufacturers.