SINGAPORE: China's oil demand growth is expected to remain weak in 2025 despite recent stimulus measures from Beijing as the world's No. 2 economy electrifies its car fleet and grows at a slower pace, the head of the International Energy Agency said on Monday.
China, which has accounted for more than 60 per cent of global oil demand growth in the last decade when its economy grew at 6.1 per cent on average, is slowing down, IEA Executive Director Fatih Birol told Reuters on the sidelines of the Singapore International Energy Week conference.
"The Chinese economy at around 4.0 per cent (growth) or so would mean China will need less and less energy," he said, adding that demand for electric vehicles, which have become cost-competitive against conventional cars, will continue to grow.
"The impact of the stimulus has not been as significant as some of the market observers have expected," Birol said, referring to Beijing's recent fiscal announcements aimed at reviving economic growth.
"It is still limited. And as we see today, it will be very difficult to see a major uptick of Chinese oil demand."
Global oil prices are hovering around US$70 a barrel after falling more than 7% last week despite rising geopolitical tensions in the Middle East.
"One of the two reasons why we saw muted reaction in oil prices is that demand is weak this year and the expectation that it will be weak next year," Birol said, noting that Chinese oil demand would have been flat this year if not for petrochemicals.
Another factor capping oil prices is the rise of supply from non-OPEC producers - the U.S., Canada, Brazil and Guyana - which is higher than global oil demand growth, he added.
When asked if he expects the Organization of the Petroleum Exporting Countries and their allies, a group known as OPEC+, to unwind production cuts in 2025, Birol said it is up to OPEC to decide on that.
"What I see is there will be a surplus next year of oil in the markets if there are no major changes in the geopolitical context," he said.