As the United States and Iran negotiate reopening the Strait of Hormuz and resuming crude oil exports, China, the world's largest oil importer, is expected to see little change in its oil import volume for the time being regardless of the outcome. Some also say China is responding most effectively to energy supply disruptions among major countries.
On the 21st, according to the New York Times (NYT), crude inventories held by China's state-owned energy corporations remain high, and refinery storage tanks are filled with gasoline, diesel and other refined products. Even though China cut daily crude imports to about one-third of normal during the war, inventories have barely declined.
China does not disclose specific figures on crude flowing into or out of its strategic reserves and commercial stocks. However, Reuters estimated China's crude reserves at at least 1.2 billion barrels.
The biggest reason China's storage is full is that it began large-scale stockpiling before the war. To strengthen energy security, China bought more crude than needed to build up reserves. In particular, it actively purchased crude whenever international prices were low, and it has also concentrated on buying Iranian crude subject to international sanctions at a discount of about $3 to $10 per barrel.
Weaker demand also contributed to rising inventories. With oil prices up due to the war's fallout, fuel consumption in China was weaker than expected. As electric vehicles spread, gasoline car sales plunged, and last month's auto sales fell 22% from a year earlier. As fuel consumption declined, refined product inventories piled up further.
The Chinese government's de facto halt of refined product exports also stoked the inventory build. To stabilize domestic supply, the government has mostly stopped refined product exports since this spring. China overtook the United States in 2024 to become the world's largest refining country, but by halting exports, the fuel produced has continued to accumulate in domestic storage facilities.
As inventories swelled, refiners lowered run rates. According to China's National Bureau of Statistics, refiners processed an average of 12.66 million barrels of crude a day, the lowest since August 2022.
Experts said that with large-scale stockpiles, weak demand and export limits coinciding, China's crude imports are unlikely to rise sharply even after the Strait of Hormuz crisis is resolved. Muyu Xu, a senior oil analyst at data firm Kpler, said, "I do not see China's crude imports structurally recovering to prewar levels anytime soon."
Reuters said, "China appears to have used its strategic reserves only sparingly while navigating this crisis," adding, "Even if ships can again pass freely through the Strait of Hormuz, it will take time for oil supply chains to normalize, and China may not rush to ramp up imports until spot crude prices fall back to prewar levels."