Oil in Global Economy Series: Oil could face major sell-offs as China plans to ban on fossil fueled cars

According to a Bloomberg report, available here, https://www.bloomberg.com/news/articles/2017-09-10/china-s-fossil-fuel-deadline-shifts-focus-to-electric-car-race-j7fktx9z the world’s biggest oil importer, China is looking to ban fossil-fueled cars in the country.  China is aiming to encourage local car producers to venture into the electric vehicle market. Speaking at an auto forum on Saturday, Xin Guobin, the country’s vice minister of industry and information technology said that regulators are working to come up with a timeline for phasing out the sales and production of the fossil-fuelled vehicles.

China is not only the world’s biggest importer of oil and oil products, it is also world’s biggest car market with 28 million cars sold in 2016 alone. While China is not the first country to consider such ban as both Franc and the United Kingdom has announced plans to ban fossil fuelled cars by 2040, China’s venture into the area is a very significant one and could cause havoc for both the markets, while electric vehicle producers enjoy.

While a very long timeline would not make much of a difference in the short run, an aggressive timeline could add volatility in the market.