China Oil Demand Contracts As Sinopec Sees 8.9% Drop Arabian Post

2026-09-09 11:17:55

(MENAFN- The Arabian Post) clearfix">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 to drop 8.7% from a year earlier to 149 million tonnes and diesel consumption to fall 11.4% to 164 million tonnes. Jet fuel demand, by contrast, is forecast to rise 1.3% to 41.55 million tonnes.

The forecast underscores a sharper structural shift in the world's biggest crude importer, where transport electrification is steadily reducing dependence on petroleum fuels while the US-Iran war has pushed up energy prices and disrupted supplies through the Strait of Hormuz. The institute said the combination of high prices and changing transport patterns was weakening consumption across key refined products.

<p>China's oil demand has now declined for three straight years, according to the institute, strengthening evidence that growth in transport fuel use has peaked. The International Energy Agency has separately estimated that electric vehicles displaced about one million barrels a day of oil demand in China during 2025, roughly 15% of the road-transport demand that would otherwise have been required if the fleet had remained dominated by internal-combustion vehicles.</p><p>The IEA expects the displacement effect to deepen as the electric fleet expands, with electric vehicles in China projected to displace about 2.7 million barrels a day by 2030 under current policy settings. China already has the world's largest stock of electric vehicles, and electrification is spreading beyond passenger cars into buses and heavy trucks, where diesel use has historically been substantial.</p>See also  Taiwan plans sharp defence spending rise for 2027 <p>The IEA has said China's transport oil consumption has flattened despite economic growth, as electric vehicles, gas-powered trucks and high-speed rail increasingly replace petroleum-based travel and freight.</p><p>The Sinopec research unit also lowered its outlook for crude processing, putting China's 2026 refinery throughput at 697 million tonnes. Sinopec itself, the world's largest refiner by capacity, has set a second-half oil throughput target of 113 million tonnes, broadly unchanged from the first half, according to its interim results.</p><p>Refining capacity is nevertheless expected to reach 952 million tonnes a year, equivalent to about 19.04 million barrels a day, in 2026. The research institute said tighter policy requirements and falling domestic demand would speed the closure of inefficient plants, particularly smaller and medium-sized refineries with limited product ranges.</p><p>It estimated that facilities representing 80 million to 100 million tonnes of annual refining capacity could leave the market. That would reduce national refining capacity to between 900 million and 910 million tonnes a year by the end of 2030, a contraction of as much as 5.5% from the 2026 level.</p><p>Weakness is also evident in petrochemicals. Although profits in China's chemical industry rose by more than 50% year on year during the first seven months of 2026, the institute said apparent demand remained subdued. It forecast full-year ethylene-equivalent consumption to decline 8% because of high costs and inventory pressures.</p><p>The demand outlook has wider implications for global oil markets because China's purchases have long been a major source of incremental consumption. Lower demand has helped restrain crude imports and limit price gains even as the conflict involving the United States and Iran has disrupted Gulf supply routes and tightened physical markets.</p>See also  Palm coolant targets Malaysia's data centre resource strain <p>Brent crude climbed above $100 a barrel on Wednesday as renewed attacks raised fears of further supply losses. Yet weaker consumption in China remains an important counterweight to the supply shock, with traders weighing the effects of reduced imports against disruption across the Middle East.</p><div class='code-block code-block-1'><h2></h2></div>

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China Oil Demand Contracts As Sinopec Sees 8.9% Drop Arabian Post

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