SunSirs: China Refined Oil Market Is Expected to Decline in 2025

In 2025, the domestic refined oil, gasoline, and diesel market prices will decline, with gasoline prices starting at 7,996 RMB/ton and ending at 7,185.2 RMB/ton, a decrease of 10.14% for the whole year; At the beginning of the year, the price of diesel was 6,777 RMB/ton, and at the end of the year, it was 6,103.6 RMB/ton. The price decreased by 9.94% throughout the year. The overall performance of the refined oil market in 2025 was average, and the market trend declined throughout the year.

Gasoline: The domestic gasoline market is expected to decline in 2025, with the lowest price of 7,075.6 RMB/ton for the entire year, which will occur on November 8th; The highest price of gasoline is 9,175.2 RMB/ton, which occurred on January 13th, with a maximum fluctuation of 29.68% throughout the year. The price trend of the gasoline market will decline in 2025, and the annual trend can be divided into four stages. In the first stage, from the beginning of the year to mid January, the gasoline market trend will rise; In the second stage, from mid January to mid May, gasoline market prices continued to fall; The third stage is from mid May to late June, during which gasoline prices experience a slight rebound; The fourth stage is from the end of June to the end of the year, during which the gasoline market continues to decline.

There are two stages of gasoline price increase: from the beginning of the year to mid January and from mid May to late June. The first increase in gasoline prices was from 7,996 RMB/ton to 9,175.2 RMB/ton, with a stage increase of 14.75%; The second increase in gasoline prices has risen from 7,484 RMB/ton to 8,204.5 RMB/ton, with a stage increase of 9.63%. The positive factors for the upward trend of gasoline market prices are mainly due to the strong support of cost crude oil, the tense geopolitical situation in the Middle East, and the planned production cuts by oil producing countries, which provide strong support for crude oil. On the other hand, during this period, gasoline was affected by the Spring Festival holiday, May Day holiday, Dragon Boat Festival holiday, and other factors, leading to an increase in residents' travel. In addition, the use of car air conditioning increased, resulting in an increase in gasoline consumption. This provided support for the consumption of the gasoline market, and the gasoline market trend rose during this period.

The two stages of gasoline price decline: mid January to mid May and late June to the end of the year. The first market decline was from the highest price of 9,175.2 RMB/ton to 7,484 RMB/ton, with a stage decline of 18.43%; The second gasoline price dropped from 8,204.5 RMB/ton to 7,185.2 RMB/ton, with a stage decline of 12.42%. On the one hand, the global economic data is poor, and the outlook for crude oil demand is not optimistic, resulting in a significant decline in the crude oil market and a negative impact on refined oil products. As a result, the domestic gasoline market trend has fallen. On the other hand, the continuous development of new energy vehicles in China is impacting the gasoline demand market, and the penetration rate of new energy vehicles is constantly increasing, which has a significant impact on the gasoline market. In addition, the supply from manufacturers is relatively sufficient, and gasoline inventory is at a high level. Due to various factors, the gasoline market is declining at this stage.

Diesel: The overall trend of domestic diesel in 2025 is expected to decline. The lowest price of diesel in 2025 will be 6,084.8 RMB/ton, with the lowest price appearing on December 22; The highest price of diesel is 7,581.4 RMB/ton, which occurred on January 13th with a maximum fluctuation of 24.6%. Diesel prices rise in two stages, one from the beginning of the year to mid January, and the other from early May to the end of June. The first upward phase was mainly influenced by the support of crude oil, coupled with some businesses replenishing their inventory during the Spring Festival travel rush, resulting in a rise in the diesel market; In the second stage, the middle and lower reaches actively stocked up, during which the temperature warmed up, outdoor work continued to increase, agricultural oil consumption increased, and with favorable support from exports, the diesel market trend rebounded. The diesel market has declined in two stages, one from mid January to the end of April and the other from early July to the end of the year, with the diesel market continuously declining. The first phase of decline is characterized by a decrease in crude oil market prices and insufficient cost support, resulting in a decline in the domestic refined oil market price trend. On the other hand, as temperatures gradually rise, diesel demand decreases and outdoor operations are restricted. In terms of logistics, due to low freight rates, the diesel market trend is declining. In the second phase of decline, the decrease in crude oil prices on the cost side became a major negative impact, while on the other hand, diesel supply remained high and downstream demand did not improve, resulting in a continuous decline in the diesel market. Overall, the contradiction between supply and demand in the diesel market will become apparent in 2025, and the price trend of the diesel market will decline.

In 2025, the retail price of domestic refined oil products will undergo 25 price adjustments, with seven increases, twelve decreases, and six suspensions. Overall, gasoline prices will decrease by 915 RMB/ton and diesel prices will decrease by 880 RMB/ton in 2025.

The trend of refined oil market in 2025 is declining. Whether the refined oil market can usher in a turning point in 2026 can be seen from the following aspects:

Cost aspect: The crude oil market directly affects the domestic refined oil market, and fluctuations in the refined oil market are closely related to the crude oil market. In 2025, the international situation is unpredictable, and overall, the crude oil market is in a "surplus year". The combination of OPEC+regulation failure, non OPEC+production increase, and weak demand growth has driven crude oil prices to fluctuate downward, and the surplus pattern at the end of the year has been confirmed.

The external environment of crude oil in 2026 is still quite complex, with intricate geopolitical situations and constant conflicts, which will have a direct impact on oil prices from time to time and cause fluctuations in the crude oil market. In the long run, the supply-demand game still dominates, and in terms of supply, the surplus will continue until the first half of 2026. OPEC+may restart production cuts, but the effect is limited, and the price center is likely to continue to move downwards. Overall, due to the large number of oil price variables in 2025, the trend of oil prices has been declining for a long time. It is expected that the average oil price in 2026 may still be slightly lower than in 2025, but due to demand constraints, there will not be much room for fluctuations in oil prices. The domestic refined oil market is greatly affected by international crude oil costs, and the overall refined oil prices may decline in 2026.

Supply side: China Refining has become the world's largest refining country, with a total crude oil processing capacity of approximately 1 billion tons per year. In 2025, the production of refined oil products has declined year-on-year. As of November, gasoline production was 142.016 million tons, a decrease of 3.9% year-on-year; The diesel production was 181.844 million tons, a year-on-year decrease of 2.0%.

In 2025, both gasoline and diesel production will decline, and China's refining capacity will continue to remain high. However, with the implementation of the 14th Five Year Plan to reduce oil and increase production, some outdated refining units will be integrated, which will largely control the growth of refining supply; However, it is expected that the production of gasoline and diesel will still be in the high-yield stage in 2026, and the high production of refined oil products will to some extent suppress the product market.

Demand side: The gasoline consumption in 2025 is expected to be around 153 million tons, a year-on-year decrease of approximately 4.3%; The consumption of diesel is about 204 million tons, a year-on-year decrease of about 3.95%. With China's control of carbon emissions, gasoline will face increasingly strict environmental restrictions, and coupled with the rapid development of new energy substitute products, gasoline demand will be further squeezed. With the continuous increase in the penetration rate of new energy vehicles, gasoline consumption will be further weakened. It is expected that the penetration rate of new energy vehicles will reach around 57% in 2026, and gasoline consumption may slightly decline in 2026. From the perspective of diesel demand, the domestic economic stimulus policies may increase in 2026, and the demand for diesel in industries such as agriculture, animal husbandry, and mining is still acceptable. However, under the slow recovery of the global economic environment, China's real estate industry may enter a destocking stage in the future, and the infrastructure industry may inhibit the expansion of diesel demand. In addition, the substitution effect of LNG heavy trucks, new energy heavy trucks, and new energy light trucks will suppress diesel demand, and it is expected that diesel consumption will continue to decline in 2026.

Overall, the international crude oil prices in 2026 will have a certain guiding effect on the refined oil market. International crude oil prices in 2026 will still be supported by favorable factors such as geopolitical tensions, but will be affected by negative factors such as loose supply, inventory pressure, weak demand, and structural differentiation. It is expected that the cost of crude oil will slightly shift downwards throughout the year in 2026. There may be some pressure on the domestic supply and demand of refined oil products, as domestic refineries have ample refining capacity and competition intensifies; In addition, the consumption of refined oil has slowed down faster than the supply, and export policies have become more flexible. However, the squeeze on refinery profits will promote the reduction of refining capacity and promote the healthy development of the industry. Due to the combined influence of bullish and bearish factors, the overall market situation of domestic refined oil products in 2026 remains relatively stable, and the pressure of supply and demand in the gasoline and diesel markets still exists. It is expected that the overall prices of gasoline and diesel in 2026 will be lower than those in 2025.

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