Global demand for oil is more than 100 million barrels per day. That number has inched up over the years, driven mostly by one country, China, which has seen two decades of new factories, a growing middle class and infrastructure investment.

But some shifts in the Chinese economy, including a slowdown, are pulling down the growth in global oil demand, according to a new analysis by the International Energy Agency.

When we talk about recent slowing oil demand in China, there are two main products to consider, said Herbert Crowther with the Eurasia Group. One is diesel. 

“There, the biggest challenge is China’s property sector woes, its real estate market, which historically was a big consumer of diesel,” Crowther said. 

The other is gasoline.

“The rapid growth of new energy vehicles in China’s vehicle fleet is both pure Rice University’s Ken Medlock still seeselectric vehicles and plug-in hybrids,” Crowther said.

“China has also though done something that Western countries hasn’t, which is, to a degree, subsidize and encourage innovation in batteries,” said Rabobank’s Joe DeLaura. “China has basically taken the battery technology and said, ‘Hey, we can do great cars.’” 

And what happens with oil demand in the rest of the world will depend on whether fast-growing countries rely on gasoline vehicles or EVs, said University of Chicago professor Ryan Kellogg. 

“If it’s the former, you could still be bullish about global oil demand,” Kellogg said. “If it’s the latter, these countries are going to grow, but guess what? They’re not going to do it like growth has historically been for the past 100 years.”

But while growth in EVs as personal vehicles may shift demand away from gasoline, Rice University’s Ken Medlock said he still sees the current slowdown in overall oil demand growth as temporary.

“You’ve still got a bunch of other products in the barrel that are still being consumed pretty robustly, like, you know, you get into diesels and the distillates and jet fuels,” Medlock said.

He said while what’s happening in China now may be weighing down global oil demand growth, more needs to happen before we reach a true plateau.