China oil demand contracts as Sinopec sees 8.9% drop
China’s oil demand is expected to fall by 600,000 barrels a day, or 8.9%, in 2026, marking a third consecutive annual decline as high crude prices and faster electric-vehicle adoption curb fuel consumption, according to Sinopec Group’s research arm. The Sinopec Economics & Development Research Institute said petrol and diesel would account for most of the reduction, with petrol demand projected…
China anticipates its oil demand to decrease by 600,000 barrels daily, or 8.9%, in 2026, marking a third consecutive annual decline, according to Sinopec Group's research. The reduction primarily stems from soaring crude prices, accelerated electric-vehicle adoption, and a diminished need for petroleum fuels due to transportation electrification.
The Sinopec Economics & Development Research Institute projects petrol and diesel demand to fall 8.7% and 11.4%, respectively, while jet fuel demand is expected to rise 1.3%. This structural shift in China, the world's largest crude importer, highlights the growing influence of electric vehicles and alternative fuel sources. Since 2023, China's oil demand has consistently declined, reinforcing the notion that growth in transport fuel use has peaked.
The International Energy Agency (IEA) estimates that China's electric vehicles displaced approximately one million barrels of oil daily in 2025, accounting for roughly 15% of road-transport demand that would have otherwise been required with an internal-combustion vehicle fleet. As electric vehicle ownership expands, the displacement effect is anticipated to intensify, with electric vehicles projected to displace around 2.7 million barrels daily by 2030, based on current policy measures.
China's electric vehicle fleet is already the world's largest, and electrification is extending to buses and heavy trucks, where diesel historically dominated. The IEA highlights that China's transport oil consumption has stabilized despite economic expansion, as electric vehicles, gas-powered trucks, and high-speed rail gradually replace petroleum-based travel and freight.
The Sinopec research unit also revised its outlook for crude processing, projecting China's refinery throughput for 2026 at 697 million tonnes. Sinopec, the world's largest refiner by capacity, has set a second-half oil throughput target of 113 million tonnes, consistent with the first-half projections. Despite this, refining capacity is expected to surge to 952 million tonnes annually, equivalent to around 19.04 million barrels per day, in 2026.
The research institute projects that tighter policies and dwindling domestic demand will hasten the shutdown of inefficient plants, particularly smaller and medium-sized refineries with limited product portfolios. This could result in the loss of 80 million to 100 million tonnes of refining capacity, reducing China's national refining capacity to between 900 million and 910 million tonnes per year by year-end 2030—a decrease of up to 5.5% from the 2026 level.
The demand outlook also has implications for global oil markets, as China's purchases have historically contributed to increasing consumption. Lower demand has aided in curbing crude imports and moderating price increases despite the US-Iran conflict disrupting Gulf supply routes and tightening physical markets. Although Brent crude surged above $100 a barrel on Wednesday due to heightened concerns over additional supply losses, weaker consumption in China remains a significant mitigating factor against supply disruptions, prompting traders to ponder the consequences of reduced imports amidst Middle East turmoil.
The story "China oil demand contracts as Sinopec sees 8.9% drop" was originally published on Arabian Post.
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