China has sharply reduced oil imports. Why is this important?

China has significantly reduced oil imports in the midst of the fuel shock that began due to the conflict between the United States and Iran. This made it possible to avoid an acute shortage of oil and stop the rise in oil prices, which, in turn, delayed the onset of the global economic crisis. China was able to abandon supplies due to large accumulated reserves and falling domestic demand for petroleum products, but in the future it will have to increase imports again. How China became the main regulator of oil prices — in the Izvestia article.

China reduces oil demand

• The war in Iran and the closure of the Strait of Hormuz, through which 20% of the world's oil trade used to pass, led to a global fuel crisis. There have been supply disruptions in the world, which have led to a sharp rise in oil prices and fuel shortages in many countries. The price of Brent benchmark crude oil is constantly above $ 90 per barrel and periodically exceeds $100. Compared to last year, oil prices have risen by 30%. In the first weeks of the conflict, many analysts predicted that the global economy would face a prolonged oil shortage that would be impossible to compensate for in the coming years.

• However, by the summer, the oil market began to calm down. This is largely due to the fact that China, the world's largest importer of oil, has sharply reduced demand. While many countries frantically searched the market for any oil reserves and were ready to overpay for it by almost half, Chinese traders reduced purchases, thereby stopping the panic in the market.

• Back in May, China reduced crude oil imports to 10.9 million barrels per day, which is the lowest level since 2022, when the country began economic recovery after the lockdown caused by the spread of COVID-19. In 2025, China imported an average of 11.6 million barrels, including 10.4 million by sea, in an effort to strengthen its energy security and accumulate oil reserves.

• However, the data released in June showed a real collapse in Chinese imports. The country's customs reported imports of 7.8 million barrels per day, the lowest since October 2017. Sea shipments totaled 6.6 million barrels per day, which is also the worst level in a decade. A sharp drop in imports from the largest buyer reduced the supply deficit, undermined by the closure of the Strait of Hormuz, and put pressure on prices, which have not risen above the psychological mark of $ 100 since the end of May, despite the fact that the United States and Iran continue to wage hostilities and are still far from a peaceful settlement.

The reasons for the sharp decline in imports

• China's willingness to reduce oil imports on such a large scale is due to a number of factors. First, over the past two years, Beijing has been rapidly accumulating reserves, taking advantage of a significant oversupply. China continues to buy oil for future use and has increased its strategic reserves by 8 million barrels since the beginning of the conflict in the Persian Gulf. However, this is no longer happening so rapidly, and active purchases at high prices to replenish stocks have practically stopped.

• Secondly, China has significantly reduced the volume of oil refining, despite the fact that refineries use mainly their own commercial reserves, rather than imported revenues. Sales of gasoline and diesel are declining in the country, as the country's population is increasingly switching to electric vehicles, and trucks powered by liquefied natural gas are increasingly being used for long-distance cargo transportation. In April, sales of gasoline and diesel fell by 15% compared to March.

• The Chinese authorities have also restricted the export of petroleum products so that the necessary fuel reserves remain in the country. Such a decision threatens private refiners with losses, which is why some of them completely stop working or stop for repairs. However, in general, the industry continues to hold on due to the fact that oil prices are stabilizing, and suppliers who are afraid of losing the Chinese market can ask for some discounts even in the current conditions.

Impact on the global oil market

• China is now acting as the main stabilizer of oil prices. It no longer claims the huge amounts of oil it used to consume, which makes it possible to redistribute the available oil more evenly throughout the rest of the world. Due to this, forecasts of oil at a price of $200 per barrel and the subsequent collapse of the global economy did not materialize. Analysts even point out that China's actions have led to a return to oil discounts, which Western countries have imposed sanctions on, although until recently, with their tacit consent, it was trading at a premium.

• China's example shows the rest of the world how to reduce the demand for oil and its shortage on the world market without harming its economy. Although the transition to electric transport and green energy is not available to all countries, to some extent this trend will still intensify, at least in developed countries. In Europe, the registration of hybrids and electric vehicles has increased during the conflict with Iran. Although this is not so significant that the demand for oil drops, it does contribute to the balance of the oil market.

Hip-hip-Urals: Russia may increase oil supplies to China by 25%

Will "unfriendly" markets open up for us, how will raw material prices behave and where to get additional volumes from?

• However, so far the Chinese model of oil consumption is based on the development of reserves accumulated in previous years. Calculations show that China can afford a few more months of reduced imports, after which it will have to increase purchases again. This will lead to an increase in prices, which may prove explosive after the release of 400 million barrels of oil coordinated by the International Energy Agency is completed by July-August. If the situation with the Strait of Hormuz does not change in any way, oil will break through the $100 per barrel level again and bring back talk of a global economic crisis.

Why is this important?

• The current oil market situation remains difficult for consumers, but it has not become catastrophic due to China. For the first time, he managed to influence the rise in oil prices, although usually the initiative belongs to producers from among the Persian Gulf countries who dictate their terms. Previously, China had already restrained the growth of LNG prices in this way, and this allows us to talk about the Chinese floating demand model as a new phenomenon that allows us to protect markets from shocks during crises. However, the calming of the markets is temporary and may yet turn into explosive growth when China returns to aggressive purchases.