2025 Crude Oil Market Prices Decline—Can 2026 Bring a Turning Point?

December 24th, News

In 2025, the market prices for refined oil products in China's local refineries declined. The price of gasoline at the beginning of the year was 7,996 CNY/ton, and by the end of the year, it had dropped to 7,185.2 CNY/ton, a decrease of 10.14% throughout the year. The price of diesel at the beginning of the year was 6,777 CNY/ton, and by the end of the year, it had fallen to 6,103.6 CNY/ton, a decline of 9.94% over the year. Overall, the performance of the refined oil market in China in 2025 was mediocre, with a downward trend in prices throughout the year.

Gasoline: In 2025, the Chinese gasoline market trend declined. The lowest price for gasoline in 2025 was 7075.6 CNY/ton, which occurred on November 8th; the highest price was 9175.2 CNY/ton, which occurred on January 13th, with a maximum fluctuation of 29.68% for the year. The gasoline market price trend in 2025 declined, and the annual trend can be divided into four stages: the first stage from the beginning of the year to mid-January, where the gasoline market trend rose; the second stage from mid-January to mid-May, where the gasoline market prices continuously fell; the third stage from mid-May to late June, where the gasoline prices slightly rebounded; and the fourth stage from late June to the end of the year, where the gasoline market trend continued to decline.

Gasoline experienced two price increase phases: from the beginning of the year to mid-January and from mid-May to late June. During the first phase, the gasoline price increased from 7,996 CNY/ton to 9,175.2 CNY/ton, with a phase price increase of 14.75%; during the second phase, the price increased from 7,484 CNY/ton to 8,204.5 CNY/ton, with a phase price increase of 9.63%. The main positive factors driving the upward trend in gasoline market prices were: on one hand, strong support from crude oil costs, as geopolitical tensions in the Middle East and planned production cuts by oil-producing countries provided strong support for crude oil. On the other hand, during this period, gasoline demand was supported by increased travel due to the Spring Festival, May Day, and Dragon Boat Festival holidays, as well as higher usage of car air conditioning, leading to an increase in gasoline consumption, which in turn supported the upward trend in gasoline prices.

There were two phases of declining gasoline prices: from mid-January to mid-May and from late June to year-end. During the first phase, prices fell from a peak of 9,175.2 CNY per ton to 7,484 CNY per ton, representing a price decrease of 18.43%. In the second phase, gasoline prices dropped from 8,204.5 CNY per ton to 7,185.2 CNY per ton, with a price decrease of 12.42%. On the one hand, poor global economic data and a pessimistic outlook for crude oil demand have led to a sharp decline in crude oil prices, creating negative market conditions for refined oil products and causing gasoline prices in China to fall. On the other hand, the continuous development of new-energy vehicles in China is significantly impacting the gasoline demand market; as the penetration rate of new-energy vehicles continues to rise, the gasoline market is facing substantial pressure. Additionally, manufacturers’ supply remains relatively ample, and gasoline inventories remain at high levels. Due to these multiple factors, gasoline prices have declined during this period.

Diesel: The overall trend of diesel in China in 2025 was downward. The lowest price of diesel in 2025 was 6,084.8 CNY/ton, which occurred on December 22; the highest price was 7,581.4 CNY/ton, which occurred on January 13, with a maximum fluctuation of 24.6%. There were two phases of diesel price increases: one from the beginning of the year to mid-January, and the other from early May to the end of June. The first phase of increase was mainly influenced by the support of crude oil prices, coupled with some merchants replenishing their inventories during the Spring Festival travel rush, leading to an increase in the diesel market. In the second phase, downstream players actively stocked up, and as temperatures warmed, outdoor work activities increased, along with an increase in agricultural fuel use. Additionally, favorable export conditions supported a recovery in the diesel market. There were also two phases of diesel price declines: 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. In the first decline phase, on one hand, the drop in crude oil prices led to insufficient cost support, causing a decline in the prices of refined oil products in China. On the other hand, as temperatures gradually rose, diesel demand decreased, and outdoor work was restricted. Meanwhile, the logistics sector performed poorly due to low freight rates, leading to a decline in the diesel market. In the second decline phase, the drop in crude oil prices became a major negative factor, and the high supply of diesel, combined with the lack of improvement in downstream demand, caused the diesel market to continue to decline. Overall, in 2025, the oversupply issue in the diesel market became evident, leading to a downward trend in diesel prices.

2025 Full-Year Adjustment of Retail Prices for Refined Petroleum Products in China:

In 2025, China's retail prices for refined oil products underwent twenty-five adjustments, including seven increases, twelve decreases, and six suspensions. Overall, in 2025, the price of gasoline was reduced by 915 CNY/ton, and the price of diesel was reduced by 880 CNY/ton.

In 2025, the market trend for refined oil products is expected to decline. Whether the refined oil market can turn around in 2026 will depend on the following aspects:

Cost Perspective: The crude oil market directly influences China’s refined oil prices. Fluctuations in refined oil prices are closely linked to developments in the crude oil market. In 2025, the global situation remains highly volatile and uncertain. Overall, 2025 marks the “first year of oversupply” in the crude oil market. The confluence of three key factors—the failure of OPEC+’s production adjustments, increased production by non-OPEC+ countries, and weak growth in demand—is driving crude oil prices into a period of volatile decline, with an oversupply situation confirmed by year-end. International crude oil has also faced pressure from macroeconomic factors, as well as constraints posed by risks of supply disruptions and expectations of declining demand. As a result, the international crude oil market in 2025 has experienced a series of ups and downs. The specific trends in international crude oil prices are as follows:

The external environment for crude oil in 2026 remains quite complex, with intricate geopolitical situations and ongoing conflicts, which will have an unpredictable direct impact on oil prices, causing fluctuations in the crude oil market. In the long term, the supply-demand dynamics will still dominate. From the supply side, the surplus is expected to continue into the first half of 2026. OPEC+ may restart production cuts, but their effectiveness will be limited, and the price center is likely to continue to decline. Overall, due to the many variables affecting oil prices in 2025, leading to a prolonged downward trend, it is expected that the average oil price in 2026 may still be slightly lower than in 2025. However, constrained by demand, there won't be much room for significant price fluctuations. The refined oil market in China is heavily influenced by international crude oil costs, and overall, refined oil prices in 2026 are expected to decrease.

Supply Side: China has become the world's largest refining country, with a total crude oil processing capacity of about 1 billion tons per year. In 2025, the production of refined oil products decreased compared to the previous year. As of November, gasoline production was 142,016,000 tons, a decrease of 3.9% year-over-year; diesel production was 181,844,000 tons, a decrease of 2.0% year-over-year. The comparison of gasoline and diesel production in China over the past few years is as follows:

From the chart, it can be seen that in 2025, both gasoline and diesel production have declined. In 2025, China's refining capacity continues to remain high, but under the implementation of the 14th Five-Year Plan's strategy to reduce oil and increase chemicals, some outdated refining facilities will be integrated, which to a large extent controls the growth of refining supply. However, it is expected that in 2026, gasoline and diesel production will still be at a high level, and the high output of refined oil products will to some extent suppress market conditions.

Demand Side: In 2025, gasoline consumption is expected to be around 153 million tons, a decline of about 4.3% year-on-year; diesel consumption is expected to be around 204 million tons, a decline of about 3.95% year-on-year. With China's control over carbon emissions, gasoline will face increasingly stringent environmental restrictions, and the rapid development of new energy alternatives will further squeeze gasoline demand. As the penetration rate of new energy vehicles continues to rise, gasoline consumption will be further weakened. It is estimated that the penetration rate of new energy vehicles in 2026 will reach around 57%, and gasoline consumption in 2026 may slightly decline.

From the perspective of diesel demand, economic stimulus policies in China may increase in 2026, which could support diesel demand in agriculture, livestock, and industrial and mining sectors. However, under the constraint of a slow global economic recovery, China's real estate industry may enter an inventory clearance phase, and the construction industry may suppress the expansion of diesel demand. Additionally, the substitution effect of LNG trucks, new energy heavy-duty trucks, and new energy light-duty trucks will also inhibit diesel demand. It is expected that diesel consumption in 2026 will continue to decrease.

Overall Outlook: In 2026, international crude oil prices will to some extent serve as a guiding factor for the refined oil market. Although geopolitical tensions will continue to provide upward support for international crude oil in 2026, the market will also be weighed down by factors such as ample supply, inventory pressure, weak demand, and structural differentiation. As a result, the average annual crude oil price center of gravity in 2026 is expected to decline slightly. China’s refined oil supply and demand may face certain pressures: Chinese refineries have ample refining capacity, leading to intensified competition. Moreover, the slowdown in refined oil consumption is outpacing the growth in supply, and export policies are becoming increasingly flexible. However, squeezed refinery profits will prompt refineries to streamline their production capacities, thereby fostering healthy industry development. With both bullish and bearish factors at play, the overall market dynamics of China’s refined oil sector in 2026 are unlikely to undergo significant changes. The supply-demand pressures in the gasoline and diesel markets will persist, and it is anticipated that gasoline and diesel prices in 2026 will generally remain lower than the 2025 price levels.