Oil imports to Asia have been weaker than anticipated in the first two months of 2025, prompting concerns about the accuracy of oil demand forecasts for the year. Imports fell by 780,000 barrels per day (bpd) compared to the same period last year, bringing the region’s average intake to 26.17 million barrels daily. Despite the decline, the year has already seen significant developments that could still impact the global oil market.
The data, provided by LSEG Oil Research, shows that China was the primary driver behind the reduced oil demand. The country’s crude imports dropped by 840,000 bpd over January and February, reaching an average of 10.42 million barrels per day, down from 11.26 million barrels per day in the same months of 2024.
This reduction aligns with reports indicating that Chinese refiners have scaled back their run rates, largely due to rising prices for Russian crude. The price hike follows the Biden administration’s final sanctions package targeting Russia’s oil sector. The sanctions, which aimed at crippling Russia’s oil trade, have particularly affected the supply of ESPO crude, a favored oil grade among Chinese refiners. With many tankers involved in the ESPO trade now sanctioned, availability of non-sanctioned vessels has dwindled.
As the cost of securing ESPO crude rises, Chinese refiners have had to reduce their operations. However, Russia has reportedly begun redirecting Aframax tankers to prioritize shipments of ESPO crude to China, suggesting that the real issue in Asia is not demand for oil but the challenges of securing affordable supply.
Recent reports also point to signs of a rebound in Chinese oil imports from both Russia and Iran. A report noted that 11 tankers that were previously sanctioned by the U.S. have joined the delivery route between Russia and China, helping to alleviate supply constraints. This adjustment indicates that demand for oil in Asia remains strong, with the primary problem lying in the ability to access the needed supply.
While analysts question whether China’s oil demand growth has peaked, global energy traders like Vitol have predicted that global oil demand will stabilize at around 105 million barrels per day through at least 2040. Despite changing growth drivers, including declining gasoline demand and rising demand from the petrochemicals industry, Vitol expects overall demand to remain steady.
In the short term, China will still play a key role in driving global oil demand, though its contribution to growth is expected to decrease. The International Energy Agency (IEA) projects China’s share of global oil demand growth to fall from 60% in the last decade to just 19% in this one. However, India is expected to pick up the slack, with forecasts suggesting it will account for 25% of global oil demand growth in 2025.
India’s long-term oil demand prospects remain strong, with estimates indicating its gas consumption could double by 2040 and triple by 2050. This growth, along with a strong 2025 outlook, positions India as a key player in the future of global oil demand.
The weak oil import figures from Asia early in 2025 are likely a temporary issue, caused more by geopolitical tensions and supply chain disruptions than any fundamental shift in demand. If the geopolitical situation improves, particularly with the resolution of the war in Ukraine and a potential lifting of U.S. sanctions on Russian oil, it’s possible that forecasts for global oil demand could be revised upward. After all, the IEA has repeatedly had to adjust its demand projections as actual consumption has consistently outpaced expectations.