As China's economy has entered a high-quality development phase with steady growth, the institute expects the petrochemical industry to rebound this year.

The International Energy Agency said in a recent report that investments in the upstream oil and gas sector this year are projected to reach the highest level since 2015.

According to the institute, domestic refining and petrochemical capacity is expected to increase in China in 2023, with production growing faster than demand.

As China aims to realize the target of carbon peak and carbon neutrality by 2030 and 2060 respectively, the low-carbon transition in the transport sector will accelerate the peak for transport oil demand.

While oil will remain the main source of transportation energy until 2035, with its share decreasing, consumption will steadily decline after 2030 with the rapid substitution of transport oil by new energy vehicles. The total oil demand is expected to drop to 650 million tons in 2035, the institute said.

China, the largest importer of crude oil, will see its crude oil imports peak at the same time the demand peaks, it said.

According to Wang, oil currently accounts for about 85 percent of transportation energy use and is expected to account for more than 65 percent in 2035 and reduce to about 45 percent in 2050.

He believes gasoline demand will peak around 2025, as electric vehicle sales are accelerating and the proportion of EVs is expected to exceed 10 percent by 2025 and 50 percent by 2035. The growth rate of gasoline demand will gradually slow down and peak around 2025, he said.

In aviation and shipping, however, oil products will continue to dominate for a long time as the research and application of zero-carbon technologies such as hydrogen energy and biomass liquids will take time, he added.

According to Lin Boqiang, head of the China Institute for Studies in Energy Policy at Xiamen University, developing alternative fuels and getting rid of the dependence on carbon-containing fuels is fundamental for China in the long term, as the country will remain a major global supplier and consumer of oil products.

"The healthy development of the Chinese oil market needs the stability of the world oil market, while the stability of the world oil market needs China to play an active role."