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By Florence Tan and Sam Li
SINGAPORE/BEIJING, Sept 9 (Reuters) – China’s oil demand is expected to fall by 600,000 barrels a day, or 8.9%, in 2026, marking a third straight annual decline, while refining capacity is forecast to shrink up to 5.5% from 2026 levels by 2030, according to Sinopec’s research arm.
Oil demand destruction, or a long-term drop in consumption, at the world’s largest oil importer has been a key factor in capping China’s crude imports and global oil prices, despite severe disruption in supplies via the Strait of Hormuz due to the Iran war.
Gasoline and diesel are expected to lead the consumption decline in China, falling 8.7% and 11.4% to 149 million metric tons and 164 million tons, respectively, in 2026. Meanwhile, jet fuel demand could rise 1.3% year on year to 41.55 million tons in 2026, the Sinopec Economics & Development Research Institute said in a report.
China’s chemical industry profits surged by over 50% year on year in the first seven months, but apparent demand remains depressed, with full-year ethylene-equivalent consumption forecast to contract 8.0% year on year amid high costs and inventory headwinds, it added.
For refining, the institute cut its forecast for China’s 2026 crude processing to 697 million tons between the second and third quarters.
Sinopec, the world’s largest refiner, earlier set its oil throughput target at 113 million tons for the second half of the year, stable versus the first half, according to the company’s interim report.
The research unit said China’s refining capacity was expected to rise to 952 million tons per year (19.04 million bpd) in 2026. However, tighter policy constraints and falling demand would accelerate the elimination of excess capacity, it added.
It also estimated that small and medium-sized refineries with simple product slates, representing a combined 80 million to 100 million tpy of refining capacity, would exit the market.
This would reduce China’s annual refining capacity to 900 million to 910 million tons by the end of 2030, the research unit said.
(1 ton=7.3 barrels for crude)
(1 ton=7.45 barrels for diesel)
(1 ton=7.88 barrels for jet fuel)
(1 ton=8.45 barrels for gasoline)
Reporting by Florence Tan in Singapore and Sam Li in Beijing; Editing by Tom Hogue, Stephen Coates and Ros Russell
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