Besides providing more evidence of the President’s bottomless insecurity and neediness, the obnoxious “Energy Dominance” messaging from this administration, coupled with military attacks on Venezuela, and Iran, as well as threats against NATO allies and Canada, are only accelerating the energy transition to China’s benefit.
Most discussions of global oil markets fixate on supply: where the next barrel comes from, how much it costs to extract, and which producer sets the marginal price. That lens is in full force with the Venezuela and Iran events this weekend.
China’s energy strategy suggests a different framing—one that looks far more like the long-standing playbook advanced by Amory Lovins and the Rocky Mountain Institute (RMI): don’t fight oil directly. Get more out of each barrel through efficiency, electrification, and better system design until demand structurally disappears.
If China succeeds at achieving their peak oil demand this year, their domestic success will be embraced by other oil importing countries that are looking to shift their oil import dollars into domestic technology investments. Oil demand will never go away, but we are seeing a long-term erosion of oil’s economic relevance.
Oil markets suffer from the same blind spot electricity markets once did: they rarely treat efficiency as a competing resource.
In the 1980s, power system planners were forced to compare new generation against negawatts—energy you never have to produce because efficiency is cheaper. In oil markets, physical barrels are modeled in extraordinary detail, while “negabarrels”—barrels permanently displaced by better design—are mostly ignored.
That omission creates two serious errors:
- Supply-side shocks are overstated, because demand is assumed to be rigid (inelastic)
- Demand-side opportunity is underinvested in, because efficiency is not treated as an asset class
This isn’t a small oversight, it leads to a fundamental mispricing of oil.
China’s electricity output and clean energy technology exports scaled record highs in 2025, LNG and coal imports contracted and crude oil imports nosed higher in another dynamic year for the world’s largest power producer and energy consumer.
Here’s a breakdown of China’s key domestic and international energy market impacts as 2026 gets underway.
China’s imports of liquefied natural gas and coal both took a steep hit in 2025 from the year before as the country’s power system gets cleaner and less reliant on fossil fuels.
China’s imports of thermal coal, used in power stations, slumped by 11% or by 40 million metric tons to around 308 million tons last year, Kpler data shows.
“If China succeeds at achieving their peak oil demand this year…”
Please note the difference between peak oil use and peak oil purchasing. Right now, China is in the process of expanding and filling its Strategic Petroleum Reserve which it is targeted at having a 90 day supply* of the oil it imports. By only buying this extra oil when the price is sufficiently low, and stopping when the oil price crosses a certain threshold, they are currently effectively setting both a floor and a ceiling in the oil market (i.e., they’re the 400 lb gorilla in the market). They’re also working to increase domestic production.
Meanwhile, they’re starting to convert their refineries from making diesel fuel to making more naphtha (useful as a petrochemical feedstock, among other things).
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*The plan is to protect themselves from both “natural” economic oil supply shocks and deliberate geopolitical attempts to cut off their supply.