According to the Sinopec Economics & Development Research Institute, China's oil demand in 2026 is projected to decrease by 600,000 barrels per day compared to the current year. This represents an 8.9% decline and marks the third consecutive year of falling consumption for the world's largest crude importer.
The contraction is most evident in refined fuels. Gasoline consumption is expected to drop by 8.7% to 149 million metric tons, while diesel demand is forecast to fall by 11.4% to 164 million metric tons. In contrast, jet fuel demand is projected to grow slightly by 1.3% to 41.55 million metric tons.
Sinopec's initial projections had predicted growth of 300,000 to 500,000 barrels per day. However, Vice President Fairy Wang noted that demand shrank rapidly following the escalation of the US-Iran conflict, which led to the revision of these estimates.
On the supply side, China's refining capacity is expected to reach 952 million tons per year. Despite this growth, actual crude processing volumes are forecast to drop to 697 million tons during the second and third quarters of 2026.
Analysts attribute the decline to a combination of high fuel prices and a structural shift toward electric vehicles. The US-Iran conflict has further contributed by increasing oil prices and creating supply uncertainty through the Strait of Hormuz.