China is buying less oil — but for how long?

The oil market’s biggest stabilizer right now is China buying less crude. Gulf supply is still under pressure nearly 100 days into the Iran war, but prices have stayed below USD 100 per barrel because China, the world’s largest crude importer, has stepped back from the market just as replacement barrels are getting harder to find.

Beijing’s pullback is big enough to matter: Morgan Stanley estimates seaborne crude arrivals to China fell to around 7.5 mn bbl / d over the past month — down from around 13 mn bbl / d a year earlier. Kpler’s numbers show the same direction, with arrivals falling to 6.4 mn bbl / d in May from 8.1 mn bbl / d in April and 10.1 mn bbl / d in March.

China’s oil demand is softer, but not soft enough to explain the drop in imports. Domestic demand is expected to fall by around 1.5 mn bbl / d y-o-y in 2Q, while crude imports are down by much more. Beijing is also cutting refinery runs, often under the guise of maintenance, and keeping more fuel at home instead of pushing refined products into export markets.

Inventories are doing the quiet work: China built up crude stocks when prices were lower, and now those barrels appear to be covering part of the gap between lower imports and still-high domestic demand. S&P Global Energy expects China to draw down commercial inventories by around 700-800k bbl / d through 3Q.

China has a deep inventory base to lean on while it stays away from the spot market. The US Energy Information Administration (EIA) estimates that the country’s strategic oil inventories reached 1.5 bn barrels in 1Q 2026. S&P Global says around 271 mn barrels of new commercial crude storage capacity is expected to come online across eight sites in 2026, pushing total capacity above 2.4 bn barrels.

They are also gatekeeping the exact figures: The EIA highlighted that China doesn’t publish full oil inventory data, so analysts have to estimate stocks through production, imports, exports, refining, and third-party tracking — which makes the cushion powerful but opaque.

Electrification is also easing pressure: The country has spent years reducing the oil intensity of transport through EVs, rail electrification, and renewables that feed the power system. The International Energy Agency (IEA) says EVs alone cut China’s oil demand by around 1 mn bbl / d in 2025 — roughly 15% of what road transport oil demand would have been without EVs.

What happens when China returns to oil?

China would return to a market with a thinner buffer. The IEA warns that global oil inventories could fall to critical lows before Northern Hemisphere summer demand peaks if current stock draws continue. Around half of the 400 mn barrel emergency release announced in March has not yet reached the market, Reuters reports, citing Toril Bosoni, the head of the IEA’s oil industry and markets ​division.

Replacement barrels still come with friction: Reserve releases and non-Gulf supply can soften the shock, but they don’t solve the harder question of reliable replacement crude if Gulf flows stay impaired. The constraint is not only low volume — it is also grade fit, shipping distance, and the extra cost of pulling barrels from farther away.

That leaves China’s return tied to price, margins, and stocks. Low Chinese crude imports will not last indefinitely — Beijing can lean on inventories now, but the trade-off gets harder the longer Gulf flows stay disrupted. When China needs to come back for barrels, market prices would have to rise enough to force demand lower.