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China will make up nearly 40% of the rise in global oil demand in 2023, Wood Mackenzie says

China will make up a sizeable portion of the world’s demand recovery for oil as the global economy braces itself for a slowdown in the wake of interest rate hikes, Wood Mackenzie said.

The research firm said in a Thursday report that it views China’s reopening as the “single biggest demand driver” for a recovery in oil demand this year — it expects the country will make up roughly 40% of the world’s recovery in demand for the commodity.

“A return to normal mobility in China is the single biggest demand driver, accounting for 1.0 million barrels per day (b/d) of the 2.6 million b/d increase this year,” a team of analysts led by vice president Massimo Di Odoardo said in the report, laying out its base case scenario. That means 38.5% of global oil demand recovery would come from China.

Chinese President Xi Jinping in his recent visit to Moscow affirmed economic cooperation with Russian President Vladimir Putin for the next several years, including on energy security. Xi, in his trip to Saudi Arabia, also stressed the importance of stability in the oil market.

Our China high-growth scenario centers on the economy growing by 7% in 2023 and 5.5% in 2024.

Wood Mackenzie

The firm added, “Barring a significant recession, we see Brent rising from current levels to average $89.40/bbl for 2023.” Current prices for the commodity as last seen trading lower, with Brent futures at $76.01 per barrel during Asia’s session.

The firm is, however, optimistic about global growth this year — despite the World Bank and the International Monetary Fund warning of a bumpy road ahead.


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