Experts are projecting a decline in petrol prices as global oil demand faces a slowdown, particularly due to diminished consumption in China, a country that has traditionally been a major driver of oil demand growth. OPEC and the International Energy Agency have both revised their forecasts downward, pointing to reduced Chinese oil consumption as a significant factor influencing the market. President Xi Jinping's government in China has been actively transitioning towards renewable energy sources, leading to weaker demand for traditional fossil fuels like oil.
The dip in Chinese consumption has had a notable impact on the price of Brent Crude oil, which dropped below $70 a barrel recently, marking its lowest value in almost three years. The current price of oil is hovering around $73, but analysts predict a further decrease to as low as $65 per barrel, which is anticipated to translate into lower petrol costs for consumers. The average national petrol and diesel prices in Australia have already fallen to 178.4 and 182.7 cents per litre, respectively, in response to the changing market dynamics.
With expectations of Chinese oil demand growth at only around 1% this year compared to 10% last year, the broader global oil demand outlook has also been revised. OPEC now forecasts a rise of 2.03 million barrels per day in 2024, down from the earlier projection of 2.11 million barrels. The uncertainties surrounding the Middle East conflict and the upcoming US presidential election further contribute to the unpredictability of future oil prices and their potential impact on petrol costs around the world. While lower petrol prices may benefit consumers, they might not significantly impact underlying inflation, according to economists.