China’s demand for oil and gas faces a weaker outlook in 2026 due to high crude oil prices, lower economic activity, and an accelerated substitution of traditional fuels with alternative energy sources.
According to analysts at BMI, a Fitch Solutions unit, the outlook for the Chinese energy market has deteriorated this year. The evolution of crude oil imports and domestic consumption reflects the pressures affecting both refineries and major fuels.
China’s crude oil imports remain under pressure
First, BMI considers that the Chinese oil imports they could remain contained as long as international prices remain high and restrictions on the transit of oil tankers through the Strait of Hormuz persist.
Analysts maintain an average forecast of $86 per barrel for Brent Dated and $83 per barrel for Brent futures in 2026. They project a price of $71 per barrel for both in 2027.
According to the scenario presented by BMI, a potential normalization of maritime traffic would allow for a gradual recovery of exports and regional crude oil production. The firm links this outlook to its assumption of a preliminary agreement between the United States and Iran during the third quarter of 2026.
On the other hand, customs statistics cited by BMI showed a sharp increase in Chinese crude oil imports during July. Volumes reached 8.63 million barrels per day, a monthly increase of 22.2%.
BMI attributed part of that recovery to a temporary improvement in tanker traffic and lower oil prices. However, analysts warn that the subsequent deterioration of geopolitical conditions again affected crude oil flows.
Gasoline and diesel consumption has fallen
Meanwhile, Sinopec’s interim results cited by BMI reflect a more complex environment for the Chinese market during the first half of 2026.
Analysts indicated that high and volatile crude oil prices affected energy demand. According to data included in the report, Brent during the second quarter, it remained more than 29% above the levels recorded a year earlier.
This pressure was compounded by a greater shift towards alternative energy sources. As a result, consumption of refined fuels decreased by 8.6% year-on-year.
Diesel saw the largest contraction, with a drop of 11.5%, while consumption of Gasoline it decreased by 7.9% compared to the same period of the previous year.
In contrast, aviation fuel saw year-on-year growth of 1.3%. BMI attributed this performance to holiday travel and the recovery of international air traffic.
Demand for oil and gas is losing momentum in China
Likewise, the weakness is not limited to the oil market. According to BMI, China’s natural gas consumption growth slowed considerably.
Demand increased by just 1.6% year-on-year during the period analyzed. Analysts believe this trend indicates that the moderation in consumption is extending to different segments of the Chinese energy market.
The combination of high prices, slower economic growth, and energy substitution creates a more demanding scenario for oil and gas in 2026.
PetroChina reduces crude oil processing
PetroChina also recorded lower volumes during the first half of the year, according to data collected by BMI.
The volume of crude oil processed decreased by 5.1% year-on-year to 655 million barrels. At the same time, the production of refined fuels fell by 8.8% to 54.35 million tons, compared to 59.57 million tons during the same period in 2025.
Despite this reduction, PetroChina’s share of the domestic refined products market increased by 0.2 percentage points year-on-year. BMI believes this trend points to consolidation within a Chinese fuel market that is currently experiencing lower volumes.
Thus, the evolution of Sinopec and PetroChina coincides with the weakening observed in demand for oil and gas from China. The coming months will be conditioned, according to BMI projections, by the evolution of the Brent price, crude oil imports and the pace of substitution of traditional fuels within the Chinese energy market.
Sources: Rigzone
Photo: Shutterstock
