Fortunes for China, the world’s largest crude oil importer, and Saudi Arabia, the world’s largest oil exporter, have crossed again. For starters, China’s oil imports are dropping. For the first seven months of the year, the country imported 2.4 percent less oil than in the same period last year. While that might seem insignificant, it’s substantial given the scale of China’s oil intake, representing a tenth of global oil production. Putting aside the Covid-19 period when oil demand tanked both worldwide and in China, recent decreases so far this year mark the largest in almost two decades for China. This is in large part due to economic headwinds from China’s property sector debacle. The property sector contributes 20 percent of fiscal revenue, stores 70 percent of household wealth, generates nearly one quarter of its GDP, and takes in 25 percent of bank loans, according to a recent China Daily report.
Added to the fray, China’s economy is forecast to face even more headwinds. Citi, Bank of America, HSBC, and Goldman Sachs last week issued downward forecasts for China’s economy - all beneath the government’s 5 percent growth benchmark. Notably, that benchmark is the lowest in decades. The downward spiral could worsen if Beijing doesn’t bring its property sector crisis under control. There are other reasons, however, for China’s lower oil demand, and much of it is welcome news. More electric electric vehicles (EVs) and natural gas-powered trucks are hitting the roads. More than half of the passenger cars sold in China last month were EVs or hybrids. EVs and natural gas-powered trucks will displace 10 percent to 12 percent of gasoline and diesel demand this year, according to China National Petroleum Corp. This in turn lowers overall oil demand and hence oil imports…
