The escalation of trade and economic tensions between China and the United States could significantly affect the global oil market. According to industry analysts, if the conflict deepens and China’s economic growth slows, the increase in the country’s oil demand could be halved — from 180,000 barrels per day to 90,000 barrels per day. This decline would particularly affect the diesel fuel sector, heavily used in industry and transportation, as well as the petrochemical industry, which is closely tied to exports and manufacturing supply chains.
China traditionally plays a key role as one of the largest oil consumers in the world. According to the International Energy Agency (IEA), China accounts for about 15% of global oil demand, and any fluctuations in its economy are immediately reflected in global oil prices. However, as noted by Rystad Energy, the market has recently become less sensitive to geopolitical events — including the US-Iran nuclear talks and the ongoing conflict in Ukraine. This may be due to market participants pricing in long-term volatility and reacting less sharply to individual political developments than in the past.
Nonetheless, US-China relations remain a major source of uncertainty. In particular, the potential lifting of US sanctions against certain Chinese oil refineries is under discussion, which could stimulate crude oil imports and domestic refining activity.
On the other hand, seasonal factors favor price growth. Rystad Energy forecasts that during the summer months, the price of Brent crude oil could exceed $70 per barrel, mainly driven by seasonal increases in fuel consumption. As of April, Brent prices are hovering around $67, and any positive signals from China could support further price growth.
Thus, the trade war between the United States and China acts not only as a macroeconomic challenge but also as a structural risk for the oil industry, influencing demand dynamics from the world’s largest importer and refiner of oil. Amid geopolitical turbulence, China increasingly serves as a “barometer” through which market participants gauge the resilience of oil demand and the potential for future price growth.
* The Institute for Advanced International Studies (IAIS) does not take institutional positions on any issues; the views represented herein are those of the author(s) and do not necessarily reflect the views of the IAIS.
