Sinopec projects China oil demand falling 8.9% in 2026

China's oil demand is expected to fall by 600,000 barrels a day in 2026, or 8.9% from the previous year, according to the research arm of Sinopec Group China Petroleum & Chemical Corporation, the country's top state-owned refiner. The forecast marks a third straight annual decline for the world's largest oil importer, driven by high crude prices tied to the US-Iran war and the accelerating adoption of electric vehicles.

A Sharp Reversal

The projection represents a dramatic shift from earlier expectations. Fairy Wang, vice president at the Sinopec Economics & Development Research Institute, said at an industry event in Singapore that the institute had originally forecast growth of 300,000 to 500,000 barrels a day for 2026, according to Bloomberg. "After the war, you see China's oil demand shrank very quickly," Wang said.bloomberg

Gasoline demand is expected to decline 8.7%, while diesel consumption could fall 11.4%, according to Reuters. Jet fuel stands as the lone bright spot among transportation fuels, with demand forecast to rise 1.3% to 41.55 million metric tons this year, buoyed by holiday travel and recovering international routes.reuters+1

War and EVs Reshape the Market

The disruption of oil flows through the Strait of Hormuz following the US-led conflict against Iran, which began in late February, sent crude prices sharply higher and accelerated demand destruction across Asia. In China, the crisis supercharged an already rapid shift toward electrification. Electric vehicles displaced 1.5 million barrels of oil a day during the second quarter alone, nearly doubling expectations, according to the International Energy Agency. Sales of heavy electric trucks from China more than doubled in the four months following the war's onset.eenews+1

Peak Oil Demand Arrives Early

The decline fits a broader structural shift. In August, Sinopec Chairman Hou Qijun said China's oil demand "very likely" peaked in 2025, earlier than the company's previous forecast of a 2027 peak. The government has targeted oil and coal consumption reaching their limits during the current five-year plan period through 2030. The IEA projects Chinese demand will fall 4% between 2025 and 2027, suggesting the losses may be lasting rather than cyclical.bloomberg+1