China June crude imports fall 41.3% as electric taxis curb petrol demand

China’s crude oil imports fell 41.3% in June from a year earlier to 29.27 million tonnes, marking the country’s weakest fuel import month since October 2016. The decline came five months into a conflict that began in late February and has kept the Strait of Hormuz under threat, a key route that normally carries 45% to 50% of China’s seaborne crude, according to Columbia’s Center on Global Energy Policy. At the same time, rising use of electric taxis appears to be absorbing part of the lost petrol demand. The Ministry of Transport estimates that about half of China’s 1.3 million taxis now run on batteries, with the biggest cities moving toward full electrification. Didi added 2 million hybrid and electric vehicles last year, taking its non-petrol fleet to 8 million, while battery-powered cars accounted for 75% of mileage booked through its app, figures cited by TNW showed. Fuel consumption data points in the same direction. China used 10% less petrol and 14% less diesel in May than a year earlier, even as road freight rose 2%, May Day holiday travel hit a record, and taxi and ride-hailing trips climbed 6% to 3.05 billion. J.P. Morgan expects Chinese petrol demand to fall by 150,000 barrels a day this year and another 50,000 in 2027. Analyst Natasha Kaneva said in a July 2 note that “The conflict may have accelerated behavioral changes that were already underway, leaving China structurally less dependent on oil than the market has historically assumed.” The shift was not driven by new policy mandates. Electrification had already been advancing for commercial reasons, but the crisis strengthened the economics of battery-powered transport as petrol prices rose and an influx of new drivers and cheaper electric cars pushed fares down 10% to 15% over six months, according to TNW. Daizong Liu, East Asia director at the Institute for Transportation and Development Policy, said, “Overall travel demand is still increasing, so more trips are shifting to public transport, such as taxis and the subway.” On the supply side, refiners ran crude distillation units at 57.72% utilization, close to a 10-year low. China’s weaker buying helped cap crude prices after Brent rose above $79 on Monday following the breakdown of a U.S. Iran ceasefire. Analysts expect the pressure on oil demand to persist. Dai Jiaquan, chief economist at the CNPC Economics and Technology Research Institute, said at a Hong Kong event that Chinese crude demand will peak within five years, while highlighting refining overcapacity of 900 million to 1 billion tonnes against declining demand of 750 million to 800 million. Greenpeace has also forecast that 90% of taxi and ride-hailing mileage will be electric by 2035.