China oil demand to fall 8.9% in 2026, says Sinopec research

China's oil demand is projected to decline by 8.9% in 2026, following a third consecutive annual drop, according to Sinopec's research. The refining capacity is anticipated to decrease by up to 5.5% from 2026 levels by 2030. Oil demand destruction in the world's largest oil importer has contributed to capping China's crude imports and global oil prices, despite supply disruptions in the Strait of Hormuz due to the Iran conflict.

Gasoline and diesel consumption in China are expected to lead the decline, with a reduction of 8.7% and 11.4%, respectively, reaching 149 million metric tonnes and 164 million tonnes in 2026. Jet fuel demand may grow by 1.3% year on year to 41.55 million tonnes in 2026. Despite surging chemical industry profits, consumption remains depressed due to high costs and inventory headwinds, with full-year ethylene-equivalent consumption forecast to contract by 8.0% year on year.

China's crude processing capacity for refining is expected to reach 697 million tonnes between Q2 and Q3 2026. Sinopec, the world's largest refiner, had initially targeted 113 million tonnes of oil throughput for the second half of 2026, which remained stable compared to the first half. China's refining capacity is projected to rise to 952 million tonnes per year (19.04 million barrels per day) by 2026.

However, tighter policies and falling demand will accelerate the elimination of excess capacity. Small and medium-sized refineries with simpler product lines, accounting for 80 million to 100 million tonnes per year of refining capacity, are expected to exit the market. This reduction is projected to lower China's annual refining capacity to 900 million to 910 million tonnes by the end of 2030.