A drop in fuel consumption coupled with shrinking refining profits in 2024 led to the first annual reduction in China’s refinery activity in more than two decades, aside from the pandemic-hit year of 2022, according to government figures released on Friday.
Chinese refineries processed an average of 14.13 million barrels per day (bpd) of crude oil last year, marking a 1.6% decrease from the peak of 14.7 million bpd achieved in 2023, when China rebounded from pandemic restrictions. This data was reported by Reuters, citing the National Bureau of Statistics.
Oil consumption in China faltered in 2024, with demand growth tapering off due to slower economic expansion and a rising shift toward electric vehicles (EVs) and liquefied natural gas (LNG)-powered trucks. Analysts note that while some of the reduced demand stems from weaker economic performance, the increasing adoption of EVs and LNG-fueled transport has resulted in a permanent decline in certain types of fuel consumption.
The combined impact of greater EV adoption, expanded use of LNG in freight transport, and a slower-than-anticipated pace of economic activity has not only curbed China’s oil consumption but also lowered earlier projections for global oil demand in 2024.
China’s crude oil imports also experienced a downturn last year, marking the first annual decline in roughly two decades, excluding the pandemic period. Average daily imports were recorded at 11.04 million bpd in 2024, reflecting a 1.9% drop from the 11.28 million bpd seen in 2023, based on customs data published earlier this week.
Notably, crude oil imports in 2023 had surged to a record pace as the country emerged from COVID lockdowns, with an average of 11.28 million barrels per day.
The rapid growth rates that defined China’s oil demand over the past 20 years are unlikely to return, as the country’s economic expansion transitions into a more moderate phase characteristic of a maturing economy.
Both China National Petroleum Corporation (CNPC) and Sinopec, the nation’s largest state-owned energy firms, anticipate an imminent peak in oil demand. CNPC has projected this peak for the current year, while Sinopec expects it to occur by 2027.