China’s oil vulnerability shifts from transport fuels to industrial feedstocks

For China, the sector with the most at stake from disrupted crude imports might be naphtha – crucial for petrochemicals that supply the country’s increasingly advanced manufacturing.

Transport fuels like diesel still account for the majority of China’s consumption of refined oil products. But that share is shrinking. (The @International Energy Agency has noted that China’s fuel demand has likely plateaued.) Meanwhile, naphtha’s share has roughly doubled.

Drivers can switch to EVs, but there is no such obvious alternative to naphtha, a form of light oil used to make propylene and ethylene. These “petrochemical intermediates” are then used to manufacture plastics, synthetic rubbers, solvents, resins, and other materials – which, in turn, supply industries ranging from packaging to semiconductors.