China To Account For 40% Of Global Oil Demand in 2023

As its economy emerges from strict lockdowns, China is expected to account for around 40% of the increase in global oil demand this year, but the increased use will not return prices to 2022 levels, consultancy Wood Mackenzie said on Thursday.

According to WoodMac, China's economy will grow by 5.5 percent this year after the country lifted its COVID containment strategy.

This would equate to 1 million barrels per day (bpd) of this year's 2.6 million bpd increase in global oil demand.

According to the report, a high-growth scenario in which China's GDP rises by 7% would add 400,000 bpd of Chinese demand.

The average price of Brent crude oil this year, however, would remain lower than the $99/bbl average seen in 2022, as "markets have now adapted to the chaos brought about by Russia's war on Ukraine," according to the report.

Barring a major recession, WoodMac expects Brent to rise from its current level of around $75/bbl to an average of $89.40/bbl this year. China's higher GDP growth scenario would amount to $5/bbl.

Following this month's market turmoil in the banking sector, the group said it did not see any major changes in supply and demand fundamentals and expects oil prices to recoup losses, according to Mark Williams, WoodMac's research director for short-term oils, at a press conference.

Barring a major recession, WoodMac expects Brent to rise from its current level of around $75/bbl to an average of $89.40/bbl this year. China's higher GDP growth scenario would amount to $5/bbl.