How China Became the Ultimate Swing Oil Buyer

Five months of mostly closed Strait of Hormuz have not sent oil prices spiking to $150 or $200 per barrel, as many analysts had warned in March.Even as more than 10% of global crude oil supply suddenly disappeared from the market, oil didn’t hit record high levels. Crude oil prices haven’t even stayed permanently above $100 per barrel.Three key drivers have kept oil prices from surging to never-before-seen highs. First, governments started tapping strategic reserves, including as part of the IEA-coordinated 400-million-barrel stocks release, to offset the 1 billion barrels of crude that never made it out of the Gulf in the first three months of the conflict. Next, Asia slashed consumption with fuel-saving measures and reduced refinery throughput.Crash in China’s Crude Imports Kept Prices Capped Arguably, the biggest cushion the market has had was China’s crude oil import behavior. The world’s largest crude oil importer 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 amid the Middle East crisis, and by slashing this import demand, Beijing single-handedly offset part of the lost supply.The market appeared to have underestimated China’s ability to be as flexible in its crude oil imports as to slash purchases by as much as 40% in June compared to pre-war levels.In addition, during the crisis, China has also seen soaring EV use, a massive switch to coal, and rising shares of power generation from renewable energy sources.China’s crude importing policy of the past few months, certainly influenced by the authorities, managed to keep international crude oil prices capped as about 4 million barrels per day (bpd) of crude didn’t have to reach Chinese refiners in the past three months.As of the end of 2025, China held the world’s biggest stockpile of oil inventories at 1.397 billion barrels, according to estimates by the U.S. Energy Information Administration (EIA). That was more than the combined strategic inventories in the United States, Japan, OECD Europe, Saudi Arabia, South Korea, Iran, the United Arab Emirates (UAE), and India—the countries next down the list of the world’s top holders of strategic oil reserves.Due to China’s opaque reporting of oil stocks, these are estimates, but they couldn’t have been too much off the mark since China slashed its crude oil imports between April 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 last month by an estimated 4.4 bpd compared to the 2025 average.Crude oil imports declined for a fourth consecutive month in June, with seaborne crude arrivals falling to just over 6 million bpd—the lowest monthly level since at least 2016, according to data from Vortexa.China’s imports from the Middle East slumped to just 2 million bpd, down from an already decade-low level of around 3 million bpd in May, Emma Li, lead China oil market analyst at Vortexa, noted.China is the world’s top crude importer, but it was also the importer best prepared to weather a global supply crisis. The estimated 1.4 billion barrels of oil in commercial and strategic reserves before the Iran war could have been even higher, as the inventories are a closely guarded secret, as are China’s imminent plans about stockpiling or drawing down reserves.Where Next?Five months into the crisis, China’s tumbling demand for crude oil imports has been the key demand-side factor in capping oil price spikes.Beijing’s demand for crude oil imports and the pace of its refined products exports will help shape the trend in oil prices through the end of the year, alongside the ongoing supply disruptions in the Middle East. Crude imports in July have rebounded from June’s decade-low by an estimated 1.5 million bpd, as millions of barrels managed to exit the Strait of Hormuz in the three-week window of the U.S.-Iran memorandum of understanding between mid-June and early July, and as China accelerated buying of Russian oil. After the U.S.-Iran memorandum of understanding sank oil prices to $70 per barrel in late June and early July and Middle Eastern producers slashed prices for July and August loadings for Asia, China’s crude oil imports may rebound this month and next, and even in parts of September, supporting demand.Renewed hostilities and the escalating threats to tanker traffic in the Strait of Hormuz and now the Bab el-Mandeb Strait in the Red Sea could thwart Chinese plans to continue ramping up crude imports in the coming months. But now that oil has jumped to $90 per barrel again, Chinese refiners may reduce purchases for cargoes arriving after September.The market will be closely watching China’s crude buying in the coming weeks and months as Beijing has become the swing demand buyer on the global oil market since the beginning of the Middle East crisis in February. 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