According to a report by the Federal Reserve Bank of San Francisco, China’s demand for oil could be entering a period of faster growth, which could result in substantially higher oil prices.
As the US buys and sells oil and petroleum products in the global market, global demand prospects influence the profitability of US oil producers and US consumers’ costs.
The survey found that the global demand will change gradually over the next decade and oil prices will continue to depend on inventories. Given that China’s demand spurred growth in global oil prices back in the 2000s, the Federal Reserve Bank of San Francisco believes the same could happen in coming years.
Economists say China’s future oil demand will depend on its economic growth and energy choices. That could result in Chinese demand for oil doubling by 2025.
Even with more moderate growth and less energy-intensive choices, China’s oil demand would still increase by more than 30% by 2025. As the US and foreign oil producers do not anticipate such a scenario, prices would rise dramatically.
