Rising Crude Oil Imports Reduce China’s Need to Draw from Stocks
China's massive crude inventories have helped cap global oil prices, allowing Beijing to slash imports despite major Middle Eastern supply disruptions.
China has drawn heavily on its estimated 1.2-billion-barrel reserves, with September withdrawals averaging roughly 530,000 bpd.
Chinese crude imports could fall to 9.2–9.3 million bpd in Q4, as oil prices above $100 encourage further stock draws rather than new purchases.
China has relied on its huge crude oil inventories since the Iran war hiked oil prices to above $100 per barrel. The world’s biggest crude importer has drawn from its 1.3-billion-barrel stash for most of the months after March as it slashed imports amid soaring prices.
The stock draws, and the reduced imports in the spring and summer, have even kept benchmark crude oil prices in check despite the major disruption to flows from the Middle East, as China’s crude supply management was one of the key buffers the market has had since the war began.
The Last Market Buffer
Now it’s the only buffer left, after the global oil oversupply at the start of the year was absorbed and stock draws elsewhere depleted crude and fuel inventories.
China had amassed an estimated up to 1.4 billion barrels of crude in commercial and strategic stockpiles before the Iran war. The huge cushion allowed it to slash imports when the Strait of Hormuz closed, and prices spiked.
Ever the opportunistic buyer, China withdrew from the spot market shortly after the Middle East crisis erupted, and by slashing this import demand, Beijing single-handedly offset part of the lost global supply.
China’s crude importing policy in the spring managed to keep international oil prices capped, as about 4 million barrels per day (bpd) of crude didn’t have to reach Chinese refiners in April, May, and June.
China slashed its total crude oil imports to a decade low in June, culminating three months of very low import levels amid high prices and constrained supply from the Middle East. Beijing could afford to dramatically reduce its crude buying, slashing import volumes in June by an estimated 4.4 million bpd compared to the 2025 average.
In July, China likely added some 200,000 bpd to its crude reserves after imports rebounded but refinery runs stayed low.
This was the only month of the past five in which China was estimated to have added to its reserves.
The world’s biggest crude oil importer tapped its inventories again in August and September, with the draws last month at about 530,000 bpd, as estimated by Reuters columnist Clyde Russell based on official data about imports, refinery throughput, and domestic production.
Unlike the United States, China does not report inventories. Analysts are looking at overall supply (domestic production plus imports) and refinery processing rates to estimate how much crude is going into reserves and how much is being processed into fuels.
Last month, China’s crude supply from imports and domestic production was about 13.46 million bpd, while refineries processed 13.99 million bpd, per Russell’s calculations.
Despite the stock draws for most of this year, China is still estimated to have at least 1.2 billion barrels of crude oil in commercial and strategic inventories.
Oil Prices and China’s Oil Imports
No one is really certain how much, but it’s certain that the huge stock buffer allows China to tweak its crude import policy depending on the oil prices at the time it is ordering and arranging crude cargoes.
Chinese crude imports in October are likely to rebound to above 10 million bpd—the highest level since March, according to data from Kpler cited by Reuters’ Russell.
This wouldn’t be surprising, considering that oil prices held at about $80 per barrel Brent for most of August, when the October-imported cargoes would have been purchased.
This year, $80 a barrel of oil is encouraging higher Chinese buying activity, especially as the Brent average so far this year is just shy of $95 per barrel, and prices have kept above $100 for more than a month now.
Increased oil flows from the Middle East, the August oil price of about $80 a barrel, and the resumption of Chinese fuel exports will boost China’s crude oil imports in October.
This would reduce the need to tap the huge inventories. China would rather keep these for the coming months, when imports could slow again after the oil price spikes in September and October.
At the end of September, Goldman Sachs said that China’s crude oil exports would rise only slightly in the fourth quarter from the third quarter if oil prices remain high. At $100 per barrel Brent and above, it is unlikely that China would materially raise imports in the near term, the bank’s analysts said.
Other analysts also concur that China is not expected to materially boost its crude oil imports through the end of the year as oil prices surged again and independent Chinese refiners struggle to procure cheaper supply amid the near-disappearance of Iranian barrels.
Analysts at FGE NexantECA and Energy Aspects have revised down their earlier projections of China’s crude oil imports in the fourth quarter by about 400,000 bpd. The analysts now expect China’s crude oil imports to be 9.2 million bpd-9.3 million bpd in the fourth quarter, well below last year’s average of 11.6 million bpd.
If oil prices remain above $100 per barrel and the conflict in the Middle East continues to disrupt trade flows, China could tap more of its massive inventories and reduce imports again. Lower Chinese imports would be some relief to the global oil market reeling from depleted inventories, a diesel crunch, and record-high fuel prices.
