China’s Sinopec, the world’s top refiner by capacity, expects Chinese oil demand to drop by 8.9% in 2026 from a year earlier amid demand destruction from higher oil prices and the acceleration of electric vehicle adoption.
Oil demand in the world’s biggest crude oil importer is expected to drop by 600,000 barrels per day (bpd) on average this year compared to last year, according to estimates by Sinopec’s research arm quoted by Reuters.
Gasoline demand is set for an 8.7% decline, while diesel consumption is expected to crash by 11.4%, Sinopec Economics & Development Research Institute says.
China has managed the Strait of Hormuz crisis better than most expectations as it slashed its imports of crude oil and temporarily banned fuel exports in the spring and early summer.
The high oil prices destroyed some demand and sped up the adoption of EVs, which has been growing anyway in recent years, suppressing total oil demand even without blocked crude supplies in the Middle East.
Amid falling road fuel demand, Sinopec, or China Petroleum & Chemical Corporation as it is officially known, is looking to transform its business.
Sinopec will be allocating more capital to new energy and chemicals by the end of the decade to grow revenues and profits amid the lowest domestic fuel sales in China in nearly a decade.
In its first-half earnings release, Sinopec flagged falling domestic fuel sales, which have been weighing on the company’s earnings for two years now.
“Due to the dampening effect of high oil prices on demand and accelerated substitution by new energy, domestic refined oil products consumption declined by 8.6% year on year, among which gasoline decreased by 7.9%, diesel decreased by 11.5%, while jet fuel (kerosene) rose by 1.3% driven by holiday travel and the recovery of international routes,” Sinopec said in its press release.
source: oilprice.com