According to Deutsche Bank, demand for oil is going to come to a screeching halt by 2020. The reasons weren’t articulated very well. I can only surmise they mean fuel efficiency will vastly improve and that the Chinese people will opt ride bicycles to work, rather than automobiles.
Either way, if Chinese demand for oil drops by half, this will be a disaster of the first magnitude for the House of Saud and similar houses of their ilk.
“We believe that oil demand growth from the passenger vehicle sector, which has made up 66 percent of Chinese total oil demand growth since 2010, may slow in the medium term and then begin to decline by 2024,” he wrote. “This casts doubt over the capacity for continued long-term oil demand growth at current trend rates in China, and by extension, the world.”
As such, oil demand growth from the world’s second-largest economy could be cut in half from 2016 to 2020, he warned.
Growth in oil demand for passenger vehicles is a function of the number in use, distance traveled, and changes in fuel efficiency. BP’s assumptions on the increase in fuel efficiency are far too low, while the EIA’s implied estimate of demand growth for transport not linked to passenger cars is unrealistically high, Deutsche Bank asserted.
Chinese demand makes up for 35% of total growth in the oil markets at the present time.
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