China, the world's largest oil importer, requires significantly less fuel than anticipated, a reality emerging three months into the Iran war. Gasoline sales at Sinopec, the world's largest refiner, dropped 8% year-on-year in April, while diesel fell 6%, with Goldman Sachs estimating a 20% decline in gasoline use.
This reduction is attributed to consumers shifting from oil-based transportation to rail, which grew 10% in March and April, and increased use of electrified subways and taxis. China's EV fleet saw a 69% rise in charging in April, reaching an all-time high. This behavioral change, alongside slowing economic growth and the property sector crisis impacting diesel consumption, has led China to drastically cut crude imports, easing pressure from the Strait of Hormuz and capping oil prices. May oil imports slumped 29% to an eight-year low of 7.8 million bpd. Sinopec forecasts national gasoline, diesel, and jet fuel demand to fall around 10% in Q2 and Q3, with analysts questioning the permanence of these shifts.
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