EV growth in China, US could lead to slowing of gasoline demand this year

Due to the shift to electric vehicles in China and the US as well as a return to normal consumption after last year's bounce post Covid-19, analysts expect the global petrol demand growth to halve in 2024. This could lead to squeezing of the second-half refinery margins. The growth of gasoline has been lowest since 2020 with demand likely to rise 340,000 barrels per day (bpd) to stand at 26.5 million bpd this year, as per consultancy Wood Mackenzie.

The growth is down from growth of 700,000 bpd last year as China nears the point of peak transport fuel demand and the U.S. has surpassed it. "Penetration of electric vehicles has been increasing in US and China," Woodmac analyst Sushant Gupta told Reuters. "For this year Chinese demand will grow by only 10,000 bpd, due to higher EV uptake," he added.

Also Read:China's services sector shows resilience despite slowing growth, Caixin PMI reveals

According to Consultancy Rystad Energy, the global gasoline demand is pegged at about 26 million bpd this year, up about 300,000 bpd from growth of about 700,000 bpd last year. This is fuelled by the consumption boom after the pandemic, analyst Mukesh Sahdev said.

World's largest auto market China was once the world's biggest driver of gasoline demand. However, now it is expected to account for more than half of all EV sales this year, as per the International Energy Agency. As per forecasts by a research arm of China National Petroleum Corp (CNPC), the world's largest crude importer's consumption is set to grow by about 1.3%, or about 2 million tons, to 165.1 million metric tons (3.8 million bpd) this year.

The research arm of the country's biggest refiner, Sinopec, expects gasoline demand to rise by 1.7%, or about 3 million tons, to stand at 182 million tons this year. On the other hand, the share of electric cars sold this year could reach 45% in China, about 25% in Europe and more than 11% in the United States, as per the IEA estimates.

On the contrary, countries are India and Indonesia are witnessing booming car sales, along with high economic growth and low EV penetration, driving gasoline demand. Petroleum consumption in India will hit a fresh record of 39.2 million tons (908,000 bpd) in the year to March 2025, up about 5% from 37.2 million tons in the year to March 2024, as per government estimates.

(with inputs from Reuters)