Sinopec’s Demand Forecast Highlights China’s Changing Relationship With Oil

Reuters reported on September 9 that Sinopec’s research institute forecasts an 8.9% demand decline, citing high prices and electric-vehicle adoption. Gasoline consumption is projected to fall 8.7% to 149 million tonnes and diesel 11.4% to 164 million tonnes, while jet fuel rises 1.3% to 41.55 million tonnes. The report also gives a reduction of 600,000 barrels daily. Those headline figures imply a previous-year base of approximately 6.74 million barrels daily; without a clear definition of coverage, readers should avoid applying the percentage indiscriminately to every category of Chinese petroleum consumption.

The broader structural explanation is supported by the International Energy Agency’s Global EV Outlook 2025. Under its stated-policies scenario, electric vehicles would displace more than five million barrels a day of gasoline and diesel globally by 2030, with China accounting for approximately half. This is displacement relative to the fuel that equivalent combustion vehicles would otherwise consume, rather than a forecast of an identical fall in total oil demand. The distinction helps explain why transport activity can expand without a matching increase in fuel consumption. Once a journey shifts to battery power, its energy demand moves toward the electricity system, creating a more persistent change than a temporary reduction in driving caused by expensive petrol.

China’s petroleum market nevertheless contains several different demand stories. In its Oil 2025 outlook, the IEA projected that Chinese oil consumption would plateau this decade as weaker transport-fuel demand was balanced by growth in petrochemical feedstocks. That earlier assessment provides context rather than confirmation of Sinopec’s latest annual forecast. Oil remains an industrial input as well as a transport fuel, and the outlook for plastics and chemical production can differ substantially from that for passenger cars. Analytically, this means falling gasoline sales do not establish the direction of the entire petroleum market; the composition of consumption becomes as important as its aggregate volume.

For refiners, the potential financial pressure comes from the relationship between product demand, operating costs and the amount of capacity available. If road-fuel consumption contracts, maintaining output could intensify competition for domestic customers or increase reliance on overseas buyers. Reducing production can protect against unwanted inventories, but it also leaves fixed costs spread across fewer barrels. Adjusting the product mix may help, although equipment constraints, investment requirements and demand for alternative products limit that flexibility. The resulting business challenge is to earn adequate returns from existing assets while avoiding expansion based on fuel-demand assumptions that may no longer hold.

The implications for global markets also require separating consumption from crude imports. Import volumes depend on domestic production, refinery activity, inventories and product trade, so a demand decline need not translate immediately into an equivalent reduction in crude purchases. Stock accumulation could support imports even during weak consumption, while inventory drawdowns could deepen an import slowdown. For companies and investors assessing China’s energy transition, the most informative indicators are therefore fuel sales, refinery utilisation, product margins and inventory movements considered together. These measures would help establish whether weaker demand represents a temporary response to costs or a lasting change in the economics of supplying China’s transport system.