Trade war threatens to halve China’s 2025 oil demand growth, warns Rystad Energy
China could lose up to 50% of its forecast oil demand growth this year if the trade war with the United States drags on, according to a new analysis by energy consultancy Rystad Energy. The finding underscores how escalating global trade tensions are rippling through commodity markets and deepening concerns about global fuel consumption.
In a client note released Monday, Rystad said China’s oil demand growth, currently forecast at 180,000 barrels per day (bpd) for 2025, could fall by half under an extreme downside scenario triggered by continued tariff battles and deteriorating global trade relations.
“The ongoing trade war has upended markets’ global economic outlook, hitting commodity prices and changing the oil demand outlook,” the report said. “The uncertainties of President Donald Trump’s tariff policies disrupted the markets’ original trajectory and posed concerns over the macro economy and demand outlooks.”
China’s first-quarter GDP growth surprised to the upside at 5.4%, buoyed by earlier stimulus measures, but Rystad cautioned that full-year growth could still slow by a full percentage point if trade relations remain strained. That slowdown could shave 0.47 percentage points off oil demand growth, especially given China’s export- and industry-heavy economic structure.
Diesel and petrochemicals hardest hit
Rystad predicts the greatest downside will be felt in diesel and petrochemical demand, as trade-driven declines in manufacturing and freight take hold. The slowdown in consumer spending and reduced industrial transport could disproportionately affect diesel, while elevated tariffs weigh on petrochemical imports and operations.
Petrochemical feedstock demand could shift internally, as Chinese firms turn away from US-sourced propane in favour of domestically cracked naphtha. If propane dehydrogenation (PDH) operators struggle to adapt—given the US dominates global propane supply—up to 100,000 bpd of propane demand could be at risk.
Gasoline and jet fuel demand are expected to be more resilient under a mild trade war scenario, tied as they are to domestic travel and mobility. However, Rystad notes there may be shifts between domestic and international travel behaviour, and that lower oil prices could actually spur more consumer-level fuel consumption.
“We expect some upside potential to offset the negative impact from the trade war and mitigate the oil demand growth loss,” the firm said. “Overall, the current estimate indicates a loss of 90,000 bpd growth in oil demand from 180,000 bpd levels.”
Broader market implications
The findings from Rystad come as global oil prices continue to slump, pressured by oversupply concerns, geopolitical risks, and signs of weakening demand. On Monday, Brent crude fell 2.09% to US$66.54 per barrel, while WTI dropped 2.03%. The drop followed news of progress in US–Iran nuclear negotiations and renewed economic headwinds stemming from President Trump’s criticism of the Federal Reserve.
Meanwhile, the U.S. administration’s recent move to impose hefty port fees on China-built tankers—potentially up to US$5.2 million per call—has further rattled energy traders and vessel operators.
With OPEC+ planning to boost production by over 400,000 bpd in May, but global consumption growth faltering, analysts are bracing for further price volatility. In Russia, the Economy Ministry recently revised down its average 2025 oil price forecast from US$81.70 to US$68 per barrel, citing weak global sentiment and oversupply.
As Rystad concluded, “the crude market may continue to remain rocky for some time yet.”
