1. China's crude oil imports plunged 41.3% in June to 29.3 million tons, the lowest monthly level since October 2016, marking the fourth consecutive month of contraction, with the pace of decline accelerating since March. [para. 1][para. 2]
2. The steep decline is driven by the U.S.-Iran war disrupting global oil markets and weighing on demand. The International Energy Agency reported on July 10 that global oil demand fell by 4.8 million barrels per day in the second quarter of 2026, with China accounting for the largest share of the decline. [para. 3][para. 4] China depends on imports for more than 70% of its crude needs, and the June drop was equivalent to a reduction of about 4.9 million barrels per day, roughly matching the daily consumption of India, the world's third-largest oil consumer. [para. 5]
3. China's weaker crude demand reflects several overlapping forces, according to Fu Chengyu, a former Sinopec chairman and member of the National Science and Technology Committee for Carbon Neutrality: market-driven cost controls, strategic energy policies, the low-carbon transition, and refined-oil export regulations. [para. 7] The rapid shift toward electric vehicles has eroded domestic demand for gasoline and diesel, the fastest-declining segments of oil consumption; the contraction in these fuels widened into double digits in April, and OPEC data showed gasoline demand fell 13% year-on-year in May while diesel demand dropped 17%. [para. 9] Policy interventions also suppressed crude imports, including a three-month government restriction on refined fuel exports that ended in early July, implemented to prevent resource outflows and imported inflation during high oil prices. [para. 12]
4. In the short term, any recovery in Chinese crude demand largely depends on refineries. Though the refined-oil export curbs were lifted, refiners still need time to arrange shipments and meet minimum inventory requirements, making an immediate rebound in exports unlikely, said Emma Li, an analyst at Vortexa. In an optimistic scenario, a gradual recovery in refined-oil exports could add 1.2 million barrels per day to crude-import demand. [para. 14] For now, Chinese refineries have little incentive to ramp up purchases because domestic fuel demand remains weak and gasoline and diesel inventories are at their highest level since 2024. Although crude inventories have fallen to a three-year low, the decline remains manageable, and with peak summer maintenance underway and refining margins negative, refiners are in no hurry to restore crude imports to previous levels, said Liao Na, general manager of GL Consulting. [para. 15] Geopolitical risks continue to disrupt supply chains: most crude shipped from the Strait of Hormuz in June was redirected to Japan, South Korea, Thailand and India, with little reaching China. A domestic refinery executive noted that tankers have left the Strait of Hormuz taking advantage of relaxed controls, but most are hesitant to return for now without a formal treaty between the U.S. and Iran. [para. 16][para. 17]
5. In the medium term, recovery will depend on Asian restocking. By June, India and several Southeast Asian countries had largely replenished inventory losses, reflecting their limited storage capacity, Li said. By contrast, crude inventories in China, Japan and South Korea fell by about 180 million barrels in the four months after the war began. Replenishing those reserves within six months would generate an additional 1 million barrels per day in import demand. [para. 18] China is well-positioned to wait out market volatility; Goldman Sachs estimates the country holds 1.9 billion barrels in crude inventory, enough to cover 117 days of demand. [para. 19] Analysts expect Chinese buyers to replenish stocks opportunistically rather than rushing back into the market. While a recent price cut by Saudi Aramco for August cargoes could spur some incremental buying, Beijing's long-term strategy has shifted from passive procurement to actively timing the market to stabilize import costs. [para. 20]
6. The key question for the global oil market is no longer whether supply will recover, but how fast Chinese demand can rebound, Li wrote on July 15. The pace at which China and other Asian buyers resume purchases and rebuild inventories has become a crucial gauge of any global market recovery. [para. 6] China's years-long energy transition has helped cushion the current crisis. Fu wrote that the country is seeking to strengthen energy independence through greater reliance on new energy, electric vehicles, coal chemicals and national oil reserves. [para. 10] Electric vehicle sales have continued to rise amid volatile global oil prices: in the first half of 2026, domestic sales of new-energy vehicles rose 7.3% year-on-year to 7.4 million units, while exports surged 120% to 2.4 million units, according to the China Association of Automobile Manufacturers. June exports jumped 160%. [para. 11]
AI generated, for reference only
Sign in with Google
Sign in with Facebook
Sign in with 财新