Sinopec announced on Thursday that it expects China's petroleum consumption to reach its peak by 2027, as demand for diesel and gasoline continues to weaken. The state-owned energy giant projected that this peak would not surpass 800 million metric tons, equivalent to 16 million barrels per day. This projection is more specific compared to last year’s estimate, which suggested the peak would occur sometime between 2026 and 2030. For reference, China’s petroleum consumption is forecasted to be 750 million tons in 2024, which represents a decline of approximately 10 million tons compared to the previous year. This marks the second consecutive annual decrease in two decades, highlighting the shift in demand for traditional petroleum products.

Wang Pei, the deputy general manager of Sinopec’s Economics and Development Research Institute, pointed out that the major uncertainty for the future of China’s energy sector is the incoming U.S. administration under Donald Trump. Wang emphasized that any changes in U.S. sanctions could significantly affect Iran’s oil exports, which currently total about 1.5 million barrels per day. As China is Iran's largest oil importer, most of these exports go to independent Chinese refineries. Therefore, any adjustments to U.S. sanctions could either increase or decrease the flow of Iranian oil to China, adding a layer of unpredictability to the energy market. In addition to this geopolitical concern, Wang also cited other potential challenges for China’s energy transition, such as changes to environmental policies, trade restrictions, and technological barriers. These factors, she noted, have already had a significant impact on China’s economy and energy sector, with the trade war being one example of external pressures.

While there are uncertainties surrounding the political landscape, Wang also noted that Trump’s second term in office could lead to the de-escalation of tensions in Ukraine and the Middle East, which may reduce the risk premium on global markets and ease some of the geopolitical pressures affecting energy prices.

In its outlook, Sinopec highlighted the growing role of alternative energy sources in China’s future petroleum consumption patterns. The increasing adoption of LNG (liquefied natural gas) and electric vehicles is expected to significantly reduce demand for gasoline and diesel. Specifically, the demand for diesel is projected to fall by 5.5% year-on-year, reaching 174 million tons by 2025. The rise of LNG-powered trucks, which made up 22% of the fleet in the first three quarters of 2024, is anticipated to displace a total of 49 million tons of diesel consumption in that year alone. Gasoline demand is similarly expected to decline by 2.4%, to 173 million tons by 2025, with electric vehicles accounting for 26 million tons or 15% of the reduction in gasoline consumption.

Of the three major refined products, only aviation fuel is expected to see an increase in demand. It is forecast to grow by 7%, reaching 45.5 million tons in 2025. This increase is reflective of the aviation sector’s recovery and the growing demand for air travel as the global economy continues to recover. The overall trend, however, suggests that China’s energy consumption is shifting away from traditional petroleum products as the country increasingly invests in cleaner and more sustainable energy sources.