Sinopec Research Institute: China's Oil Demand to Shrink by 600,000 Barrels/Day in 2026
nashnova research
Sinopec's research arm forecasts China's 2026 oil demand will drop 600,000 barrels per day year-on-year — a stark reversal from its start-of-year call for 300,000–500,000 bpd growth — as EV adoption and war-driven high prices reshape the world's largest crude importer.
From growth to contraction — what flipped the forecast?
At the start of the year, Sinopec's Economics & Technology Research Institute expected 2026 Chinese oil demand to grow 300,000–500,000 bpd. The new call: a decline of 600,000 bpd. This means → the forecast has reversed entirely, a swing of nearly one million bpd.
Two forces hit at once: the US-Iran war pushed crude prices higher + EV adoption accelerated the displacement of gasoline cars. In plain terms = on one side, oil is too expensive and people drive less; on the other, a growing share of drivers burn no oil at all.
Deputy director Fairy Wang (王菲) told a Singapore industry conference: "Over the past 20 years, China contributed 50%–70% of global incremental oil demand. Now we must accept a reality where a larger economy generates almost no additional oil consumption."
How far are gasoline and diesel falling?
Gasoline demand is expected to drop 8.7%, to 149 million tonnes.
Diesel consumption is projected to shrink 11.4%, to 164 million tonnes — a steeper fall. This means → electrification is no longer just a passenger-car story; commercial-truck EVs are now eroding diesel, the traditional "hard demand" segment.
China's total refinery throughput is forecast to decline roughly 5.4%, to about 700 million tonnes. Upstream processing volumes will contract in step.
Which demand comes back, and which is gone for good?
Wang noted that about 30% of the demand decline stems from high oil prices — consumers travel less or switch to public transport. This portion can recover if prices fall.
Demand displaced by EVs, however, is a permanent loss. In plain terms = a driver who has bought an electric car will not switch back when oil gets cheaper. That demand is gone.
This reflects a structural shift in China's oil-demand composition: short-term swings track oil prices, but the long-term trajectory tracks EV penetration.
Electric heavy trucks — diesel's new threat?
Electric heavy trucks rose from roughly 20% of heavy-truck sales at the start of the year to over 40% in July and August. The full-year share is on track to reach 50%.
This means → heavy-truck electrification is moving far faster than expected, crossing from pilot phase into the mainstream.
This reflects a pressure on diesel demand that is structural, not merely cyclical — once EV penetration among heavy trucks passes the halfway mark, the decline in diesel consumption may be very hard to reverse.
Has China's oil demand peaked?
Sinopec chairman Hou Qijun (侯启军) said last month that China's crude demand may have peaked in 2025, earlier than previously expected.
The institute's latest forecast puts a number on the post-peak contraction: a year-on-year decline of 600,000 bpd.
Whether EV penetration can keep rising will be the critical checkpoint for judging if this trend continues. In plain terms = if EV adoption keeps climbing, the drop in oil demand is not a one-year event but a long-term direction.
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