China’s oil demand is expected to fall by 600,000 barrels per day(bbl/d), or 8.9%, in 2026, marking the third consecutive annual decline, according to China Petroleum & Chemical Corporation (Sinopec)’s research arm. The drop reflects weaker gasoline and diesel consumption and signals a structural shift in the world’s largest oil‑importing market.

Transport fuels are set to lead the contraction, with gasoline demand forecast to fall 8.7% and diesel 11.4%. Jet fuel, by contrast, is projected to rise 1.3%, Reuters reported.

The downturn comes despite continued growth in China’s chemical sector, which recorded a 50% year‑on‑year profit surge in the first seven months of 2026.

Sinopec’s study also highlights mounting pressure on refiners, with crude throughput in 2026 forecast at 697 million tons against total refining capacity of about 952 million tons per year.

However, stricter policies and weaker domestic demand are expected to accelerate the closure of inefficient facilities. Between 80 million and 100 million tons per year of refining capacity, mainly at small and medium-sized refineries, could be phased out, bringing China’s total refining capacity down to between 900 million and 910 million tons by 2030, according to the research.

The anticipated closures could have implications for China’s crude imports and global oil markets, particularly as the country moves from rapid expansion of refining capacity toward a period of consolidation.

China’s weakening oil demand reflects a broader structural transformation in its energy and transportation sectors rather than simply a cyclical slowdown. The International Energy Agency (IEA) reported that China’s oil demand growth had already slowed sharply in 2025. Although Chinese GDP expanded by about 20% between 2021 and 2025, oil use in transportation remained broadly flat as the rapid electrification of road vehicles, increased use of natural gas-fueled trucks and greater high-speed rail ridership offset rising economic activity.