Rystad Cuts China Fuel Demand Forecast as Hormuz Shock Reshapes Oil Imports

Rystad Cuts China Fuel Demand Forecast as Hormuz Shock Reshapes Oil Imports China's oil imports have collapsed to 8 million bpd since April, and Rystad now projects gasoline and diesel use to fall roughly twice the pace it forecast before the Iran war. Consultancy Rystad now expects Chinese gasoline use to fall 6.6% this year and diesel consumption to drop 6.9% — nearly double the 3.5% and 3% projections it held before the Iran war began. The revision, published Thursday (2026-07-16), reflects an import collapse that has moved faster than most models anticipated.⁴ China averaged 11.5 million barrels of oil per day for five years before the conflict. Since April it has averaged just 8 million bpd, with shipments in June falling to 40% of pre-war levels.⁴ ICE Brent crude front-month traded at $87.82 a barrel on Friday (2026-07-17), well below the $105 range seen in mid-May 2026 when Hormuz disruptions were at their peak, in part because China's retreat has freed cargoes for other buyers and muted the global tightening signal. Some analysts now project China's imports could remain 1 to 2 million bpd below pre-conflict levels even after the war ends — a demand loss that would mark a historic shift for the country that anchored global oil consumption growth for two decades.⁴ Electric and hybrid vehicles reached a record 62% of new car sales in China in June (2026-06), extending a transition already under way before the conflict but sharpened by higher fuel prices and squeezed supply.⁴ A weak Chinese economy has simultaneously weighed on total car sales volume, meaning the fleet moving to electric is smaller than some earlier forecasts assumed, but the penetration rate has accelerated anyway. Diesel is where the structural argument gains the most weight. Beijing announced a trucking electrification plan in June (2026-06), targeting 80% electrification of major short-haul freight routes by 2030. Rystad analyst Ye Lin described the war as "a trigger" for demand destruction that was already building before April.⁴ Diesel use in China was softening ahead of the conflict; the supply shock appears to have converted a cyclical dip into an accelerated policy trajectory. Not all the compression is structural. Chinese state-owned refiners cut crude runs to multiyear lows in May 2026 after imports slumped, reducing throughput rather than final consumption.³ If crude flows normalize through a diplomatic settlement or alternative routing, refinery runs would recover and part of the apparent demand decline would reverse. The global supply picture has been less severe than feared partly because US export volumes rose through the disruption period. That combination — higher American exports and lower Chinese demand — has cushioned the rest of the world from what would otherwise have amounted to close to 9.3 million barrels a day of net tightening.² Analysts were more alarmed in May. Citi on Tuesday (2026-05-19) projected ICE Brent front-month could reach $120 near-term on prolonged supply disruption; Wood Mackenzie modelled a path toward $200 in a severe scenario.¹ At $87.82 on Friday (2026-07-17), the market is pricing something closer to the diplomatic-settlement scenario than a prolonged blockage. The Rystad demand revision adds a complication: even if Hormuz reopens cleanly, China's import trajectory may not snap back to pre-war levels. Beijing's trucking electrification announcement in June (2026-06) gives the demand-destruction thesis a policy anchor it previously lacked. Whether the Rystad fuel demand cuts prove to be peak shock or a new structural baseline will become clearer once refinery run rates recover and consumption data from the second half of 2026 filters through.⁴