A sustained pullback in consumption from the world’s largest crude importer could continue to temper global oil prices
China’s oil demand is set to shrink sharply
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China’s oil demand is expected to fall by 600,000 barrels a day in 2026 – an 8.9% year-on-year drop and its third consecutive annual decline – according to finds by Sinopec’s research arm reported by multiple news outlets.
Analysts say that a sustained pullback in consumption from the world’s largest crude importer could continue to restrain China’s imports and temper global oil prices, even as supply disruptions linked to the Iran war pressure the market.
What’s driving it the fall in China’s oil demand:
- High crude prices are curbing fuel consumption, Reuters says.
- Faster electric-vehicle adoption is eroding demand for road fuels, according to Sinopec.
- Gasoline demand is projected to fall 8.7 percent to 149 million tonnes, while diesel is expected to drop 11.4 percent to 164 million tonnes according to the projections from the Sinopec Economics & Development Research Institute.
- Demand remains depressed in China’s chemical industry, researchers found, with full-year ethylene-equivalent consumption reportedly forecast to slump 8 percent year on year amid rising costs and inventory challenges, Sinopec’s research arm said.
- The institute meanwhile slashed its projection for China’s 2026 crude processing to 697 million tons between the second and third quarters.
One exception: Jet-fuel demand is forecast to rise 1.3 percent to 41.55 million tonnes, suggesting air travel is holding up better than road transport in terms of demand.
The context: Sinopec’s forecast is markedly more bearish than PetroChina’s June outlook, which anticipated a 4.9 percent fall in China’s oil demand in 2026.
[See more: China’s robust trade growth bolstered by global AI demand in August]
The divergence between the two forecasts dramatically underscores how quickly high prices and transport electrification may be reshaping the outlook for refiners and crude suppliers in China.
Bottom line: China’s oil demand peak may be arriving sooner – and declining faster – than many global producers had expected.
