China’s Oil Consumption Likely Peaked Last Year, Sinopec Says

Photo by Willian Justen de Vasconcellos on Unsplash

China Petroleum & Chemical Corporation (Sinopec) has published its interim results for 2026 and held a briefing on the company’s performance.

According to Sinopec’s own statistics, China’s consumption of refined petroleum products fell by 8.6% year-on-year in the first half of 2026, while diesel consumption declined by 11.5%. One of the key factors behind the decline is the accelerating electrification of road transport.

The share of electric vehicles in China’s passenger-car sales reached a record 65.1% in July 2026. At the same time, sales of conventional combustion-engine vehicles continued to contract sharply. In July, they were down 41% year-on-year, or 44% when conventional hybrids (HEVs) are excluded.

Sinopec Chairman Hou Qijun said domestic petroleum-product consumption had fallen significantly during the first half of the year, with diesel prices weakening more sharply than gasoline prices.

He expects petroleum-product demand to improve somewhat in the second half compared with the first six months. Nevertheless, consumption for the full year is now expected to decline by around 8%, substantially more than the previously anticipated contraction of 4–5%.

Most importantly, Hou said that China’s domestic crude-oil consumption probably reached its peak in 2025.

He added that consumption could recover somewhat in 2027 if geopolitical tensions affecting global energy markets ease, but he does not expect it to return to last year’s level.

This represents a significant revision to Sinopec’s previous outlook. In 2024, the company expected Chinese oil demand to peak only in 2027. If the new assessment proves correct, the peak arrived roughly two years earlier than Sinopec itself had anticipated.

Sinopec’s refining volumes are already declining

During the first half of 2026, Sinopec processed 113.31 million tonnes of crude oil, equivalent to approximately 4.57 million barrels per day, down 5.6% year-on-year.

The decline accelerated in the second quarter: crude throughput fell by 17% compared with the previous quarter, while domestic petroleum-product sales dropped by 18%.

Sinopec expects to process approximately another 113 million tonnes of crude in the second half of the year, broadly in line with the first half. This would bring average full-year refining throughput to approximately 4.52 million barrels per day, around 10% below the previous year.

The figures illustrate how rapidly electrification is beginning to affect one of the world’s largest oil markets. China has historically been one of the main sources of incremental global oil demand, meaning that a structural peak there would have implications extending well beyond the domestic market.

Europe provides an important parallel, although the drivers are somewhat different. European oil demand has already been on a long-term declining trajectory as a result of vehicle-efficiency improvements, electrification, demographic trends and climate policy. China is now potentially entering a similar phase, but from a much larger transport and industrial base and at a considerably faster rate of EV adoption.

Profits increased despite falling fuel sales

Despite weaker petroleum-product demand, Sinopec reported net profit attributable to shareholders of RMB 25.6 billion, up 19.3% year-on-year.

However, profit in its marketing and distribution segment fell by 28.6%, highlighting the pressure that declining conventional-fuel demand is already placing on the company’s traditional downstream business.

Rather than trying to resist the structural shift, Sinopec is increasingly positioning itself as part of China’s transition toward electrified transport.

The company has developed close cooperation with CATL, the world’s largest battery manufacturer, and is planning long-term investments in electric mobility and decarbonisation. Sinopec is also a CATL shareholder. In 2025, the two companies signed an agreement to jointly develop battery-swapping stations.

In 2026, Sinopec and BYD, the world’s largest manufacturer of electrified vehicles, also signed a strategic cooperation agreement covering the joint construction of fast-charging infrastructure.

The business logic is straightforward. Sinopec controls locations for 31,278 filling stations across China, serving around 20 million customer visits per day. Sinopec can provide the land, retail infrastructure and distribution network, while battery and EV manufacturers provide the technology.

This gives the company a potentially valuable asset in a transport system where electricity gradually replaces gasoline and diesel: many traditional filling stations can be converted rather than abandoned.

From filling stations to integrated energy hubs

Sinopec is already transforming some of its conventional service stations into integrated energy hubs combining:

• EV fast charging;
• battery swapping;
• solar generation;
• battery energy storage;
• conventional fuels; and
• EV maintenance and related services.

For example, its Fuzhou Huangshan station combines battery swapping, 24 fast-charging points and a 340 m² photovoltaic solar roof.

Hou said Sinopec will continue making strategic investments in new materials and new-energy businesses. By 2035, the company expects its activities to rest on three main pillars: oil, natural gas and new energy.

This strategy is increasingly typical of large energy companies facing declining road-fuel demand. For European oil companies, the comparable transition is already visible in investments in public charging networks, renewable electricity, hydrogen and low-carbon fuels. Sinopec’s advantage is the extraordinary scale of both China’s EV market and its existing nationwide retail network.

China’s oil demand could fall to 753 million tonnes in 2026

Sinopec’s assessment is broadly consistent with another recent outlook from China’s oil industry.

According to the China Oil, Gas and New Energy Market Development Report 2026, prepared by PetroChina’s Planning and Engineering Institute (CPPEI), Chinese oil consumption is expected to decline to approximately 753 million tonnes in 2026, down 4.9% from 2025.

If that estimate is realised, it would imply that Chinese oil consumption in 2025 was approximately 792 million tonnes, meaning a year-on-year reduction of close to 39 million tonnes in 2026.

The important development is therefore not simply weaker oil consumption during one year. Several indicators are increasingly pointing toward a structural change: exceptionally high EV penetration, declining diesel demand, falling refinery utilisation and the decision by China’s largest oil companies themselves to accelerate investment in charging, battery swapping and other new-energy businesses.

If 2025 ultimately proves to have been China’s oil-demand peak, it could become one of the most consequential milestones yet in the global energy transition.