China’s Top Refiner Saw Fuel Demand Plunge After Oil Spike
(Bloomberg) -- China’s biggest oil refiner said road fuel demand plummeted in the first half as consumers shied away from higher prices and shifted to electric vehicles.
Sinopec’s earnings report showed that gasoline consumption fell by 7.9% and diesel by 12%. Chemical products also took a hit, with consumption of ethylene and its equivalents down 9.9% from the same period in 2025. Natural gas and jet fuel consumption grew, but only barely.
“Due to the dampening effect of high oil prices on demand and accelerated substitution by new energy, domestic refined oil products consumption declined by 8.6% year on year,” Sinopec said in the statement.
Overall refining output dropped 5.6% to 113 million tons, and the company expects to maintain that level in the second half, indicating only muted hopes for a pick up in demand, Citigroup Inc. analysts including Oscar Yee said in a research note.
It wasn’t all bad news for the company, as higher oil prices boosted revenue for the company’s well-head production, and also increased the value of its oil stored in tanks. Preliminary net income was 26.6 billion yuan ($4 billion) for the six months through June. The company, officially known as China Petroleum & Chemical Corp., earned 23.8 billion yuan in the first half of last year.
Sinopec’s shares rose as much as 1.5% in Hong Kong on Monday.
Brent crude averaged about $87 a barrel from January through June, compared with around $71 in the same period in 2025. Prices touched a four-year high above $126 in late April, two months after the US and Israel began their military campaign against Iran. Prices remain volatile as the conflict, now in its sixth month, shows little sign of ending.
Still, the company could see improved margins in the second-half of the year thanks to potential access to cheap Russian crude and sharply lower premiums for Middle East supply, Citigroup’s Yee said. The analysts also praised Sinopec’s ability to boost chemical exports by 70% to access higher overseas prices, although they cautioned that may be bad news for other Asian refiners.
Sinopec said it plans capital spending of 82.9 billion yuan to 99.9 billion yuan in the second half. It’s targeting production of 141.8 million barrels of crude oil and 746.3 billion cubic feet of natural gas.
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