China's Gasoline Consumption Could Plunge 5.5% in 2026 as Oil Prices Surge

Why It Matters

The slump curtails revenue for Chinese refiners and signals weaker global crude demand, while reinforcing the shift toward electric mobility. Investors and policymakers must adjust strategies as the gasoline market contracts faster than anticipated.

Key Takeaways

• Gasoline demand forecast to fall 5.5% in 2026.
• Retail fuel prices up 30% since Iran conflict.
• EV adoption accelerates as internal combustion cars become costlier.
• Overall Chinese oil demand growth slows to 50,000 bpd.
• IEA expects demand rebound in Q3 after Strait of Hormuz flow.

Pulse Analysis

The Iran‑Israel conflict has sent crude prices soaring, pushing retail gasoline in China up roughly 30% since the war began. GL Consulting now projects a 5.5% drop in Chinese gasoline consumption for 2026, marginally deeper than its earlier 5.2% estimate. The decline would be the second‑steepest on record after the pandemic‑induced slump of 2022. With oil demand growth expected to slow to just 50,000 barrels per day, the market is feeling the combined pressure of higher prices and a maturing EV ecosystem.

Higher pump prices are reshaping driver behavior, especially in megacities where electric vehicles offer lower operating costs and expanding charging infrastructure. Automakers are accelerating EV rollouts to capture market share, while Chinese policymakers continue to subsidize battery production and tighten emissions standards. The resulting shift reduces the volume of refined gasoline that domestic refineries can sell, pressuring margins and prompting some plants to consider repurposing capacity for petrochemicals or renewable fuels. Investors watch these trends closely as they affect global crude demand and pricing dynamics.

The International Energy Agency still sees a modest rebound in Chinese fuel demand in the third quarter, assuming a gradual normalization of oil flows through the Strait of Hormuz after June. If the base‑case scenario holds, refiners could recover some lost throughput, but the longer‑term trajectory points toward a slower‑growing gasoline market as EV penetration climbs toward 30% of new vehicle sales by 2030. Stakeholders—from oil majors to downstream processors—must adapt strategies, balancing short‑term volume recovery with investments in cleaner, higher‑value products. The transition also opens opportunities for biofuel blending and carbon‑credit markets.