China's oil imports have fallen dramatically, averaging just 8 million barrels per day (bpd) since April compared to a long-term average of 11.5 million bpd, according to Reuters. June shipments dropped to 40% of pre-Iran war levels, surprising market observers and keeping a lid on global crude prices.
The Uncertainty Behind the Decline
The speed and scale of the reduction have puzzled analysts. "It's the million-dollar question," said Michal Meidan, head of China Energy Research at the Oxford Institute for Energy Studies. "There's a massive level of uncertainty because we don't fully understand what has happened."
A key challenge is the lack of visibility into China's oil data: the size of its strategic petroleum reserves is a state secret, its oil companies are opaque, and its data is patchy. Some analysts predict Chinese oil imports could ultimately decline by 1–2 million bpd from pre-conflict levels, a sharp reversal for the country that drove global demand growth for decades.
Transport Fuel Demand Under Pressure
Roughly half of China's crude imports are refined into transport fuels, and the Iran war has revealed a transport system able to run on less fuel than previously thought. Electric and hybrid cars rose to a record 62% of new car sales in June, though the overall car market has weakened due to a sluggish economy—hundreds of thousands fewer vehicles were sold this year. Still, the fleet remains 87% petrol-powered.
In June, the government launched a plan to electrify trucking, targeting 80% electrification on busy short-haul routes by 2030. Consultancy Rystad Energy expects Chinese gasoline and diesel use to drop 6.6% and 6.9%, respectively, versus pre-war forecasts of 3.5% and 3%.
| Fuel Type | Pre-War Forecast Decline | Post-War Expected Decline |
|---|---|---|
| Gasoline | 3.5% | 6.6% |
| Diesel | 3.0% | 6.9% |
"The crisis has acted as a trigger," said Ye Lin, an analyst at Rystad. "It helped consumers build more confidence in electric cars and trucks."
Industrial Demand and Economic Headwinds
China's prolonged property crisis has battered the construction industry, denting diesel demand for years, with property prices still falling. A structurally weaker economy could also hit demand for plastics and other petrochemicals, hurting refiners and reducing oil use as the sector faces competition from coal-based alternatives.
"Something we're not thinking enough about is the broader economic story," Meidan added. "That is a really big question that will impact Chinese oil demand and industrial activity."
The Role of Stockpiling
Beijing's reserve-building campaign last year inflated crude imports, positioning China well to absorb the shock of the Strait of Hormuz closure. That stockpiling appears to have ended since the war began, but uncertainty clouds the outlook. Beijing does not publish reserve targets or current stock levels. Reuters reported last year that China was building a series of new storage tanks, and in May, Premier Li Qiang called for even more capacity during a visit to a reserve site.
"Although there is demand destruction, there will still be incremental crude oil imports that China will use to fill its strategic petroleum reserves," said June Goh, senior analyst at Sparta Commodities.
Outlook
Structural changes—including electrification and a weaker economy—could lower monthly crude imports to a range of 8 million to 9 million bpd, according to analysts. The key unknowns are the pace of electric vehicle adoption, the depth of the economic slowdown, and when China might resume building strategic stocks. Market watchers will closely watch upcoming trade data and policy signals for clues about the permanence of this demand shift.
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