Key facts
- Sinopec forecasts China's oil demand will fall 8.9% in 2026.
- Gasoline demand is expected to decline 8.7% and diesel 11.4%.
- Jet fuel demand is projected to rise 1.3% in 2026.
- High oil prices and EV adoption are cited as key drivers for the demand drop.
- Sinopec is shifting investment towards new energy and chemicals.
China's oil demand is projected to fall by 8.9% in 2026, according to estimates from Sinopec's research arm. This significant drop is attributed to demand destruction caused by elevated oil prices and the accelerating adoption of electric vehicles, which are impacting road transportation fuel consumption. Gasoline demand is expected to decrease by 8.7%, while diesel demand could fall by 11.4%. In contrast, jet fuel demand is anticipated to see a modest increase of 1.3% in 2026 compared to the previous year, driven by recovery in travel and international routes.
Sinopec, officially known as China Petroleum & Chemical Corporation, is the world's largest refiner by capacity. The company has noted falling domestic fuel sales for two consecutive years, impacting its earnings. In response to these trends, Sinopec plans to reallocate capital towards new energy and chemicals by the end of the decade to diversify revenue streams and maintain profitability amid the lowest domestic fuel sales in nearly a decade. The research indicates that high oil prices, exacerbated by geopolitical events like the Iran war, have accelerated the structural shift towards EVs, suppressing overall oil demand even without significant disruptions to crude supply from the Middle East.
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