Demand for oil in China is on pace to slide 20% this month, the biggest shock since the early days of COVID
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China’s demand for oil is tumbling in April, as the country battles the latest wave of COVID infections by ordering massive lockdowns that are keeping people inside their homes and limiting industrial output, according to a Bloomberg report Friday.
Gasoline, diesel and aviation fuel demand is on track to drop by 20% this month, sources with inside knowledge of China’s energy industry told Bloomberg. They said the decline is the equivalent to a drop in crude oil consumption of 1.2 million barrels a day.
That would result in the biggest oil-demand shock in China since lockdowns began more than two years ago in Wuhan, the initial epicenter of the coronavirus outbreak that eventually turned into a pandemic. China is the world’s largest crude importer.
Gasoline demand is logging the largest drop. Demand for diesel has slumped from the trucking industry, but there’s some support from the agricultural and industrial sectors.
Energy demand is weakening as China tackles its latest wave of COVID infections by ordering millions of people to stay indoors under a zero-tolerance approach. During April, more than half of China’s largest cities were under lockdown measures, according to NPR.
Most factories and offices reportedly remained closed in Shanghai, which is China’s biggest city and home to 25 million people. City officials on Friday said they would relax some restrictions on truck drivers to lessen pressure on food supplies and trade, the Associated Press reported.
Amid the strict lockdowns, Beijing expects the Chinese economy to expand by about 5.5%, the lowest growth target since 1991.
Prices for Brent crude, the international benchmark, and West Texas Intermediate crude each dipped about 0.8% Friday but remained above $100 a barrel. They have climbed by roughly 35% this year largely on the back of supply concerns stemming from the war against Ukraine by Russia, a major oil producer.