KEY POINTS
- Sinopec’s research arm expects China’s oil demand to fall 8.9 percent, or 600,000 barrels a day, in 2026, a third straight annual decline.
- Gasoline demand is seen dropping 8.7 percent and diesel 11.4 percent, while jet fuel bucks the trend, rising 1.3 percent to 41.55 million tons.
- Refining capacity is set to reach 952 million tons a year, even as crude throughput fell to 697 million tons between the second and third quarters.
China’s oil demand is set to fall 8.9 percent in 2026, a third straight annual decline, as high prices and accelerating electric-vehicle adoption curb consumption, according to Sinopec’s research arm.
The drop marks a structural shift at the world’s largest oil importer. Specifically, the Sinopec Economics and Development Research Institute projected demand would fall by 600,000 barrels a day from the previous year. Moreover, this long-term erosion has helped cap China’s crude imports and global oil prices, even amid severe supply disruption through the Strait of Hormuz during the Iran war.
Transport fuels lead the decline
Road fuels are driving the retreat. According to the institute, gasoline demand will fall 8.7 percent to 149 million metric tons, while diesel drops 11.4 percent to 164 million tons. Consequently, the two mainstays of China’s fuel market are shrinking as electric vehicles spread and the economy leans less on heavy industry.
However, not every fuel is falling. Jet fuel demand could rise 1.3 percent to 41.55 million tons in 2026, the institute said, reflecting resilient air travel even as ground transport electrifies. Therefore, aviation stands out as a rare pocket of growth in an otherwise contracting market.
Refining runs ease back
Refining capacity keeps expanding despite the demand slide. Furthermore, the institute expects China’s refining capacity to reach 952 million tons a year in 2026, underscoring how supply-side buildout continues even as consumption cools. As a result, the gap between capacity and actual use looks set to widen.
Yet actual processing has softened. Specifically, crude throughput fell between the second and third quarters to 697 million tons, a sign that refiners are trimming runs to match weaker fuel demand. Additionally, the pullback adds to pressure on margins across an industry already grappling with overcapacity.
Ultimately, the figures point to a maturing market. Since structural decline in transport fuels, rather than short-term price swings, increasingly shapes China’s consumption, the country’s pull on global crude flows looks set to keep easing over time.
