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China’s state oil major Sinopec reported a net profit of almost $7 billion for 2024, which represented a 16.8% decline on the year, attributed to lower oil prices and electric cars.
“In 2024, international crude oil prices fluctuated downward, the domestic transportation industry accelerated the replacement of new energy … (and) gross profit margin was significantly narrowed,” SInpec said in a filing with the Hong Kong Stock Exchange.
“The company made every effort to expand the market and sales … (and) continues to strengthen cost and expense control, and take multiple measures to cope with market changes,” the company also said.
Be that as it may, the 2024 net result is actually an improvement on the previous year, which saw profit decline by 9.9% on 2022. At least partially, the development might be attributable to the slowdown in demand recovery after the pandemic lockdowns and, of course, international oil price movements after the surge of 2022.
The company noted in its annual report that while oil prices were up by 5.3% over the first half of the year, in the second half they slipped by 9.3%, resulting in an overall annual decline. Sinopec also reported a slight decline in total Chinese refined petroleum product demand last year, at 1.9% from 2023.
China has become the world’s biggest market for electric cars, prompting some energy companies, Sinopec among them, to predict a looming peak oil demand. However, last year sales of battery EVs began to get undermined by sales of hybrids, which could signal a saturation point for the pure play EVs.
Last year, Sinopec said it expected oil demand in China to peak at a level of some 16 million barrels daily in 2027. This prediction sees the peak in oil demand growth a year later than fellow state giant CNPC, which has predicted that oil demand growth in China will peak in 2026.
