Oil demand in China might drop for the first time in two decades, as families who would normally be boarding planes and jumping into cars for the Mid-Autumn festival remain under lockdown this year.
The festival, which takes place on 10 September, would typically see Chinese families use transport and fuel en mass. However, the world’s largest energy consumer has been under widespread lockdowns over the last couple of years, with energy usage plummeting.
The latest lockdown in Sichuan Province capital Chengdu was extended indefinitely earlier this week, and tech hub Shenzhen remains under a tiered restrictions system in line with China’s radical zero-Covid policy.
Production has fallen across the country in recent months, sending demand fears for oil and other commodities through the roof.
Analysts estimate China’s demand for fuel could drop by 380,000 bpd to 8.09 bpd in 2022. Energy Aspects analyst Sun Jianan called the contraction a “watershed moment.”
To compare, fuel demand rose by 5.6%, or 450,000 bpd, in 2021 throughout the country.
Oil imports have fallen 4.7% year-to-date, marking the first contraction for an eight-month spell since 2004.
“We believe imports will only rise substantially in early Q1 23 when China begins to source crude for the Lunar New Year, rather than our previous expectation of Q4 22,” Sun said.
