With the rising adoption of electrical vehicles (EVs), particularly in China and the United States, global demand for petrol is expected to decline by 50 percent in 2024. This shift, and the return to normal consumption patterns post-COVID-19, should have profound implications for refinery margins in the second half of the year.
Consultancy firm Wood Mackenzie forecasts a 340,000 barrels per day increase in petrol demand for 2024, marking the lowest growth since 2020. This contrasts sharply with the 700,000 barrels per day growth the market witnessed last year. The primary driver behind this decline is China nearing its peak transport fuel demand and the U.S. surpassing it. Meanwhile, Rystad Energy pegs global petrol demand at about 26 million barrels per day in 2024, attributing the surge to a consumption boom after the pandemic.
Rise of EVs
According to the International Energy Agency (IEA), China will account for more than half of all EV sales this year. The IEA expects the share of EV sales this year to reach 45 percent in China, 25 percent in Europe and more than 11 percent in the U.S.
The penetration of EVs has been steadily increasing, particularly in the U.S. and China. Analysts highlight that Chinese demand for petrol will grow by only 10,000 barrels per day this year, primarily due to higher EV adoption. Meanwhile, China National Petroleum Corp (CNPC) expects petrol consumption to grow by around 1.3 percent to 3.8 million barrels per day this year.
Besides, India and Indonesia continue to experience booming car sales and high economic growth. Therefore, petrol consumption in these regions remains robust. According to government estimates, India’s petrol consumption will reach a record high of 39.2 million tons by March 2025, a 5 percent increase compared to 37.2 million tons in March 2024.
Read: U.S. refiners’ profits set to fall in Q1 of 2024, margins remain strong
U.S. petrol consumption falls
The U.S. Energy Information Administration (EIA) revealed that petrol consumption in the U.S. fell to around 8.94 million barrels per day in 2023 after reaching a record high of 392 million gallons in 2018. With the declining trend, analysts now expect demand in 2024 to be stagnant. Meanwhile, in Europe, FGE expects demand for petrol to grow 2.3 percent in 2024 to 2.19 million barrels per day.
