That combination creates a potential pivot. With enormous inventories and strong margins, China could next surprise markets by raising refinery runs and boosting fuel exports to capture elevated product prices. Such a move would ease global product tightness but further reduce its crude demand, adding a bearish undercurrent to the crude market even as geopolitical risk premiums push Brent above $100 a barrel.
The longer‑term picture adds another layer of uncertainty. The International Energy Agency predicts the first decline in global oil demand since the COVID‑19 pandemic in 2026, and a potential surplus of more than 5 million barrels per day in 2027 if Middle Eastern production and exports gradually recover. A Reuters survey of energy analysts estimates an average supply deficit of 1.5 million bpd in 2026, but expects a 1.9 million bpd global surplus in 2027 as US, Latin American and OPEC+ output rises.
China’s own energy transition is accelerating the demand question. Roughly half of all new passenger cars sold in China are now electric vehicles, a shift that already reduced oil consumption by around 1 million barrels per day last year. Combined with the current crisis‑driven fuel substitution and inventory drawdowns, the risk of a permanent demand loss is no longer theoretical.