China's refiners are grappling with shrinking road fuel demand and an oversupply of jet fuel that even booming aviation cannot absorb.
The bad news for China ’s refiners doesn’t seem to end—faced with weaker road transportation fuel demand, plants have churned more jet fuel to meet growing aviation demand. But the pivot to jet fuel has created an oversupply that the rising aviation fuel demand cannot absorb.
As a result, Chinese oil refiners continue to see weak refining margins and look to export markets to alleviate the domestic oversupply. China’s state-controlled energy giants have started to admit that the so-called new energy vehicles – the ones not running on refined petroleum products – are eating up domestic road fuel demand, which has already peaked. China National Petroleum Corporation CNPC, the controlling shareholder of PetroChina, acknowledged as much in its outlook unveiled in April. While stronger economic growth than previously expected and booming demand for petrochemicals will lift China’s oil demand by 1.1% this year, consumption of transportation fuels has peaked, CNPC’s think tank Economics and Technology Research Institute ETRI said. Like CNPC, the International Energy Agency IEA also believes that oil demand for fuels in China has reached a plateau. So far, jet fuel has been the only transportation fuel with growth prospects in China. Demand is set to continue rising, but supply has started to outpace consumption. In 2025 alone, jet fuel supply is already over 40% ahead of demand in China, per data from Kpler cited by Bloomberg. In another sign of the glut of jet fuel in Asia and refiners looking to capitalize on higher prices in other regions, oil traders were estimated to have shipped in June the highest volumes in a year of jet fuel from South Korea and China to Europe. As the markets feared some disruption to oil and petroleum product flows from the Middle East, jet fuel prices in Europe jumped amid peak summer aviation travel demand. Despite the surge in flows to Europe, Northeast Asian jet fuel margins and prices remain subdued due to ample supply, according to analysts. By Tsvetana Paraskova for Oilprice.com
Refiners Jet Fuel Road Fuel Demand Oversupply New Energy Vehicles Exports Aviation Oil Demand CNPC
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