China’s oil demand projected to fall by 600,000 barrels daily in 2026
The world's largest oil importer is drinking less crude for the third straight year, driven by electric vehicles and the fallout from US-Iran tensions.
China is on track to consume 600,000 fewer barrels of oil per day in 2026 compared to this year, an 8.9% decline that marks the third consecutive annual drop for the world’s largest crude importer. The projection comes from Sinopec’s Economics & Development Research Institute, and it’s a number large enough to reshape global energy markets.
The numbers behind the decline
Gasoline consumption in China is expected to contract by 8.7%, falling to 149 million metric tons in 2026. Diesel demand looks even worse, with an anticipated 11.4% drop to 164 million metric tons.
The lone bright spot in refined fuels is jet fuel, projected to grow a modest 1.3% to 41.55 million metric tons.
Sinopec’s initial forecast for 2026 was actually optimistic, calling for demand growth of 300,000 to 500,000 barrels per day. That estimate got shredded after the US-Iran conflict escalated and its ripple effects hit Chinese consumption patterns hard. Sinopec vice president Fairy Wang acknowledged the speed of the reversal, noting that demand “shrank very quickly” after the onset of the US-Iran war.
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What makes this especially striking is the supply side. China’s refining capacity is still growing, forecast to reach 952 million tons per year. Yet crude processing volumes tell a different story, dropping to 697 million tons in the second and third quarters of 2026.
EVs and geopolitics: a one-two punch
The US-Iran conflict has pushed oil prices higher and created supply uncertainty through the Strait of Hormuz. The sustained decline is already capping global oil prices despite substantial supply disruptions through the Strait of Hormuz.
Industry analysts suggest that the combination of high fuel prices and a structural shift towards EVs may result in permanent demand losses. Previous forecasts from other energy firms and consultancies indicated that demand in China was reaching its peak, with estimates suggesting reductions in the hundreds of thousands of barrels per day due to the electrification of transportation.