1. [para. 1][para. 2] In the context of the U.S.-Israel-Iran war, China played the crucial role of a shock absorber in the global energy market, remaining conspicuously absent from the buying panic after Iranian missiles struck supertankers near the Strait of Hormuz, pushing crude back above $80 a barrel. Leveraging vast stockpiles and shifting domestic demand, Beijing was well-prepared as prices later surged above $100 following Houthi attacks in the Red Sea.
2. [para. 3][para. 4] Reflecting this strategy, Chinese crude imports plunged 41.3% year-on-year in June to about 29.3 million tons, the lowest since October 2016. The contraction wiped out roughly 4.9 million barrels a day of seaborne demand—an amount nearly equivalent to India's entire daily consumption—marking the fourth consecutive month of year-on-year decline after double-digit growth before the war.
3. [para. 7][para. 8][para. 9] The import pullback stems from structural energy shifts, large stockpiles, and squeezed margins. According to Liao Na of GL Consulting, the rapid pivot to electric vehicles is evaporating gasoline and diesel demand, which fell 13% and 17% year-on-year in May per OPEC data. With inventories at multi-year highs and margins negative, refiners feel little urgency to import, diverting crude transiting the Strait of Hormuz toward buyers with more rigid demand, including Japan, South Korea, Thailand, and India.
4. [para. 10][para. 11][para. 12][para. 13][para. 14] China's strategic crude reserves, estimated by Goldman Sachs at roughly 1.9 billion barrels (covering 117 days of demand), provide significant leverage. Former Sinopec chairman Fu Chengyu wrote in an Energy Intelligence article that the reduction is a deliberate shift from passive supply guarantee to active management meant to stabilize procurement costs, curb global oil speculation, and strengthen pricing power and domestic energy security. This flexibility has prevented oil prices from testing the astronomical highs of $120 a barrel seen in March following the onset of the war.
5. [para. 16][para. 19][para. 20] Threats remain, exemplified by the July 14 Iranian cruise missile attack on two UAE tankers escorted by the U.S. navy. While Gulf nations exported 16.1 mb/d in June, shipments fell to less than 50% of pre-war levels. Global markets have stabilized as the United States, Brazil, and Venezuela each added over 3 million barrels per day in exports since March, keeping oil prices below $100 per barrel.
6. [para. 21][para. 22] Goldman Sachs' Daan Struyven expressed surprise at the oil market's resilience despite the violent supply disruptions, attributing it to the strength of the supply system and the fall in Chinese buying. Market observers expect Chinese demand to remain subdued until crude prices stabilize further, with Beijing choosing instead to opportunistically replenish reserves during price drops.
AI generated, for reference only
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