Commodities

Why does China pose the biggest threat to OPEC now?

According to experts, for the world’s major oil suppliers – Saudi Arabia and the OPEC cartel – the maximum threat comes from China, not from reducing CO2 emissions to zero or deals with “green energy” in the West, writes Yahoo.

Sales of gasoline and diesel-powered cars in China fell by 20% year on year in February. Sales of electric cars continue to grow rapidly and have already reached 32% of the standard passenger car market.

At current sales rates, electric car sales in China will reach 8 million this year, thanks to the spread of battery charging stations and despite the cancellation of subsidies at the end of last year. The most popular electric car in China is the BYD Song Plus at £22,000, followed by the smaller Wuling Mini starting at £4,000.

In China, cheap electric cars are produced for the mass market, which is not yet available in the West.

Until recently, the consensus forecast was that electric vehicle penetration in China would reach 40% by 2030, but this threshold will be reached this year if automakers can work fast enough to meet demand, so sales of electric cars in China are expected to reach 80% by 2030.

Read also:  Oil prices fall amid fears over Chinese demand

According to Bloomberg New Energy Finance, electric cars have already displaced 1.5 million barrels per day of oil use, or 1.5% of global demand, and this process will only accelerate in a geometric progression.

Experts believe that oil demand in China will suddenly begin to fall, and by 2030, half of China’s entire car fleet could become electric, resulting in millions of “unnecessary” barrels of oil per day.

In addition, China’s high-speed railways will eliminate the need for domestic airlines. The use of oil per capita in the country will never come close to the American level.

For now, OPEC+ supports the idea that oil demand will continue to grow until the middle of the century, but this idea is based on the outdated assumption that the growing middle class in Asia more than compensates for the reduction in imports in Europe and America.

Whatever is said publicly, the Saudis know the game is up. They see the world’s largest gasoline car market collapsing.

For the past 40 years, the Saudis have closely cooperated with the United States and Europe on the global oil market to maintain stability.