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Oil demand in China has slowed markedly this year amid the country's shift to electric vehicles and natural gas, Goldman Sachs analysts said.
The firm estimates that oil demand growth in the country is down to 200,000 barrels per day for 2024 compared to last year, with overall consumption down by 300,000 barrels a day.
The shift from gas-fueled cars to electric and hybrid vehicles alone has reduced demand by 500,000 barrels a day, the analysts said.
China's EV sector has expanded rapidly, with three of its biggest electric car makers hitting record sales in June. A report from last month finds Chinese EV companies are catching up to — and even beating — industry leader Tesla when it comes to innovation.
In an earlier report, the analysts predicted the surge in electric and hybrid sales will cause China's road oil consumption to peak in 2025, years ahead of most emerging market economies.
The analysts say the oil demand slowdown also indicates broader concerns around China's dependence on manufacturing.
"While oil data now send a too pessimistic message about China economic activity (fuel switching does not lower GDP), overcapacity highlights the fragility of China's manufacturing bet," the analysts wrote.
The oil slowdown comes as China's economy faces a slowdown across the board, with a struggling property sector and weak consumer sentiment.
On Monday, the country's two main stock exchanges stopped reporting daily data on flows from foreign investors, part of a greater move away from reporting real-time data as the economy remains stuck in a rut.
