Strong EV Sales Restrict China Oil Demand Growth

China's 2023 crude oil demand is expected to grow less than previously expected, as strong demand for electric vehicles weighs on gasoline demand, an expert at China National Petroleum Corporation's (CNPC) research arm said on Tuesday.

The state oil company's Economic & Technology Research Institute (ETRI) in March forecast oil demand reaching 743 million metric tons this year for the world's top crude importer. This is equivalent to around 14.86 million barrels per day (bpd).

But speaking at an event in Beijing, Wang Lining, head of markets at ETRI, said growth would come in below original forecasts this year, with oil demand reaching 740 million tons, or about 14.80 million bpd.

"The main reason, I think, is that the replacement of cars this year is relatively large," Wang told Reuters on the sidelines of the event.

China is the world's largest market for electric vehicles. Sales rose 10.5% in May versus the month before, accounting for a third of total car sales, according to the China Passenger Car Association (CPCA).

Demand is set to grow further, with Beijing issuing new measures to promote EV purchases.

The International Energy Agency also said earlier this month that strong demand for EVs would curb oil demand growth.

China's gasoline demand will grow by 0.8% this year from 2019 levels before peaking in 2025, according to ETRI forecasts.

Disappointing economic data also contributed to the smaller growth forecast, added Wang.

Several major banks have cut their 2023 economic growth forecasts for China this month amid concerns its post-COVID recovery is faltering.

Wang also said demand for both diesel and kerosene would not reach 2019 levels this year.

(Reuters - Reporting by Andrew Hayley; Writing by Dominique Patton; Editing by Andrew Heavens, Emma Rumney and Sharon Singleton)

Related Stories