Chinese purchases of a relatively niche type of fuel from the US have been the single biggest contributor to global oil demand growth in recent years, the International Energy Agency said.
Since 2019, China has snapped up an additional 850,000 barrels a day of so-called NGLs and polymers, the IEA said in its Oil 2024 report, which is effectively the agency’s medium-term outlook. That accounts for just over half of demand growth for all oil products over the period.
NGLS, or natural gas liquids, are a by-product of gas production that can be used to make petrochemicals. Their production has increased significantly in the US as a result of the higher volumes of shale output there. As well as their use in plastics production, NGLs also include fuels like propane that are used to heat homes and businesses.
The surge is a rare sign of growing interconnection between the US and Chinese economies. Energy agencies and oil companies have long said that petrochemical demand — in part for the production of plastics — will be a major driver of global consumption in the long-term. That’s even as conventional fuels like diesel and gasoline are being threatened by the switch to electric vehicles.
“This has transformed oil and petrochemical market dynamics,” the IEA said. “Chinese petrochemical feedstocks have provided the single most important contribution to world oil demand growth in recent years, dovetailing neatly with one of the largest drivers of incremental global supply: US NGLs.”
Despite China’s petrochemical boom, the IEA also said that the country’s gasoline demand may tip into decline from 2025. That’s a result of mass-market electrification as battery EVs and plug-in hybrids account for 50% of domestic vehicle sales.
