China’s real oil demand masked by rise of unlicensed fuel trade: sources

Chinese oil demand figures may be inaccurate due to an increase in unlicensed fuel sales since the start of the Middle East conflict, according to various industry sources. Beijing does not disclose actual oil consumption, relying instead on "apparent demand," which is derived from official refinery output and net imports of refined products.

Official data states China's apparent oil demand in Q2 2026 declined by 12% year-over-year to 153.47 million metric tons. However, actual demand may be higher, with estimates suggesting it could be around 200,000 b/d higher than official figures. The surge in unlicensed fuel sales is primarily due to elevated oil prices, with private wholesalers using unauthorized tanker vehicles to supply discounted diesel and gasoline directly to commercial vehicles and construction equipment.

This unauthorized activity is not captured in official statistics and is obscuring the true decline in gasoline and diesel consumption. The recent crackdown on such sales has not curbed the trend, as pump prices have risen significantly, making the unlicensed market more attractive. Unlicensed fuel sales are mainly concentrated in Shandong province, with independent refineries serving as the main buyers of sanctioned Iranian and Russian crude.

As crude imports decline and independent producers burn through their stocks during the conflict, the unlicensed market may eventually self-limit, but it could still impact China's crude buying appetite and global oil prices.