Things will never be the same again: The war in Iran has forced the Chinese to give up gasoline
Chinese are switching to electric vehicles / Photo Pexels (illustrative)
The rapid rise in oil prices due to the war in the Middle East has accelerated one important trend in China. More and more local drivers are abandoning conventional cars in favor of electric vehicles.
How the war influenced the Chinese choice
In particular, in April the share of new electric vehicle registrations in China rose to almost 42% from about 38% in March, writes Bloomberg, citing the China Automotive Technology and Research Center. At the same time, demand for gasoline cars weakened, causing price declines for both new and used cars with internal combustion engines.
The war in the Middle East has accelerated structural changes in China's energy consumption. As a result, part of the fuel demand lost during the conflict may never return.
According to analysts, the world's largest importer of crude oil this year may lose 200-600 thousand barrels per day of consumption for transportation needs. According to other forecasts, the long-term reduction will be about 300 thousand barrels per day.
For those who switched to electric vehicles during the war, there may be no particular reason to return to traditional cars, unless fuel prices become significantly lower, noted Lin Ye, vice president of oil markets at Rystad Energy.
Similar trends have been noted by the International Energy Agency, which suggested that China's average oil demand this year will fall by 360 thousand barrels per day. If the forecast comes true, it would be the first significant annual decline since the oil crises of the 1970s and early 1980s.
The organization also noted a significant increase in the use of electric vehicles and accelerated charging rates in Chinese cities. However, the war likely only reinforced the existing shift away from gasoline and diesel.
What else will change for China
Incidentally, against the backdrop of disruptions in the Strait of Hormuz, Chinese manufacturers increased aluminum production to record levels. However, the end of hostilities in the Middle East could change the situation: China's exports risk shrinking while domestic demand remains sluggish.
Recall that the Chinese economy is currently going through a difficult period, particularly due to the prolonged crisis in the real estate sector. That is why for many enterprises, especially metallurgical ones, exports remain one of the key sources of growth.
