Beijing Bounces Back?

How important is Chinese oil demand for the tanker market?

For two decades, the Chinese economy has been the main driver of global oil demand and the tanker market has mostly thrived in its wake.  Even during Covid, the Chinese economy fared better than in most western countries as strict zero-Covid policies kept large outbreaks to a minimum.  However, China’s relative outperformance started to falter in 2021.  Chinese oil demand in 2021 was 5.8% higher than in 2020, but 2022 is showing a year over year decline of 1.1%.  Maintaining the zero-Covid policy meant frequent lockdowns in sometimes major cities.  This caused a slowdown in economic growth and oil demand.  Recently, the Chinese government has started to relax some of the most restrictive zero-Covid policies.  It is not entirely clear at this point whether this should be seen as positive or a negative for oil demand.  While a more relaxed stance on Covid could stimulate the economy and boost travel for example, severe Covid outbreaks may overwhelm the Chinese medical system and force the government to revert back to the previous restrictions.

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