High Oil Prices Speed Up China’s Shift Away From Crude

China's oil consumption dropped by 9% year-over-year in the second quarter, as high crude prices accelerated the adoption of electric vehicles, trucks, rail and industrial equipment. This decline resulted in a 1% reduction in China's carbon dioxide emissions, marking the first quarterly emissions decrease driven primarily by lower oil usage, according to the Centre for Research on Energy and Clean Air (CREA).

Power-sector emissions rose by 3% during the same period due to increased coal-fired generation. Electric vehicles (EVs) alone displaced 36 million metric tons of oil in the first half of 2026, accounting for about one-third of the reduction in Chinese oil demand, with another 19 million tons displaced in the second quarter alone—50% more than the previous year.

EVs and electric trucks played a significant role in reducing diesel consumption in China's largest transportation fuel market, with alternative-fuel use in the trucking sector increasing by 90% year-over-year between January and June. Oil prices rose following the Iran war's disruption of Persian Gulf supply and Hormuz traffic.

China reduced crude imports and relied more on inventories. Simultaneously, EVs and electric trucks were replacing more gasoline and diesel, providing China with additional ways to mitigate its exposure to high oil prices. Oil consumption also decreased in construction and mining as electric equipment replaced diesel-powered machinery.

Slower growth in China's chemical sector further reduced petroleum demand. CREA estimates that lower oil consumption avoided approximately 35 million tons of carbon dioxide emissions during the second quarter, representing around 1.3% of China's total emissions during the period. These emissions calculations encompass the electricity used to charge EVs.

While China remains the world's largest crude importer, changes in its transportation fleet have broader implications beyond its emissions numbers. CREA anticipates Chinese emissions could continue to decline throughout the year as oil demand weakens, property activity remains subdued, and coal-to-chemicals production nears capacity.

For oil producers, the 9% decline in China's oil consumption is the key figure to watch. The proliferation of EVs in China's fleet was already diminishing gasoline demand; however, the $90-plus crude prices are now expediting diesel displacement as well.