China’s Sinopec is adjusting its crude procurement strategy as conflict in the Middle East disrupts traditional oil flows, turning increasingly to Brazil, Africa and other producers outside the Gulf. The move underscores the growing importance of energy supply diversification for the world’s largest crude-importing market while China simultaneously faces weaker domestic fuel demand and structural pressure on refining margins.

Sinopec Expands Its Global Crude Supply Network

Sinopec executives said the company will increase sourcing from Brazil, Africa and other regions while continuing to strengthen relationships with stable producers such as Saudi Arabia and the United Arab Emirates. Chairman Hou Qijun said the refiner would use “all possible means” to secure crude, including Saudi oil shipped through the Red Sea port of Yanbu and UAE supplies transported through pipelines to loading points outside the Gulf.

The strategy reflects a broader effort to reduce exposure to disruptions around critical Middle Eastern shipping routes. Sinopec has approximately 20 days of crude oil stocks for processing and enough refined fuel for about 15 days of sales. Company officials did not provide details on government-controlled reserves, saying Sinopec would follow established rules when accessing them.

Lower Refining Activity Signals Weakening Demand

The supply challenge is occurring alongside a significant slowdown in Sinopec’s refining activity. Second-quarter refinery throughput fell 17% from the first quarter, while domestic refined fuel sales declined 18%. Reuters calculations indicate that maintaining broadly stable processing volumes in the second half of the year would require annual crude throughput of approximately 4.52 million barrels per day, around 10% below 2025 levels.

Despite these pressures, Sinopec reported a 19% increase in first-half net profit. The result highlights the company’s ability to navigate supply disruptions and government restrictions on passing higher crude costs through to consumers. However, the decline in fuel consumption presents a longer-term challenge that cannot be addressed solely through changes in crude procurement.

Energy Transition Becomes a Strategic Priority

Sinopec is increasingly positioning its capital allocation around the structural changes affecting China’s energy market. The company plans to devote approximately 20% of its capital spending, equivalent to more than 30 billion yuan annually, to new energy and new materials between 2026 and 2030.

Company officials said Chinese oil consumption may have peaked in 2025, while refined fuel demand is expected to decline 8% this year after falling by a similar rate during the first half. That decline is deeper than the previously expected 4% to 5% contraction, pointing to accelerating changes in transportation and industrial energy consumption.

Looking ahead, Sinopec’s ability to diversify crude supplies will remain important as geopolitical risks continue to affect global energy markets. At the same time, the company’s longer-term performance will increasingly depend on how effectively it manages declining fuel demand, excess petrochemical capacity and its transition toward new energy and materials. For global investors, Sinopec’s strategy offers a broader indication of how China’s energy sector is adapting to both geopolitical fragmentation and structural changes in domestic consumption.