China's Oil Demand Rebounds, Crude Prices Rise Broadly from Congo to Brazil
nashnova research
Cut off from Persian Gulf barrels, Chinese refiners are scrambling for African, Canadian and Latin American crude, pushing Congo's Djeno premium from $15 to $20 a barrel in two weeks and squeezing smaller refiners out of the market.
Why did Congolese crude spike so fast?
Tensions at the Strait of Hormuz have choked Persian Gulf supply, forcing Chinese refiners to source from farther afield.
Congo's Djeno crude was offered to Chinese buyers this week at a premium — the extra charge above the benchmark — of $20 per barrel over Brent, up from roughly $15 two weeks ago.
This means → the tighter supply gets, the more pricing power shifts to sellers; buyers with fewer options pay up.
Where else is China buying?
Chinese refiners have recently snapped up large volumes of Canadian, Brazilian and Argentine crude.
Russia's ESPO blend — the main Pacific-coast export grade — has also rallied on strong Chinese demand.
In plain terms = China is sweeping the globe for any barrel that doesn't come from the Persian Gulf.
Who gets squeezed out first?
Some smaller Chinese private refiners have already been priced out of the market.
These plants relied heavily on discounted Iranian and Venezuelan crude, both of which are now largely cut off.
This means → thin-margin refiners have no bargaining power; once prices rise, they simply stop buying.
Does higher buying mean demand is recovering?
Liao Na, founder of energy consultancy GL Advisory, is explicit: the buying spree is driven by refinery margins and inventory restocking, not stronger underlying demand.
Chinese crude imports are trending back toward 10 million barrels per day, but remain well below the pre-conflict level of roughly 12 million bpd.
Goldman Sachs estimates current imports are down about 35% year-on-year.
In plain terms = buying more doesn't mean burning more — refiners are stocking up while margins allow, not because downstream consumption needs the oil.
How much leverage does China have?
China holds at least 1 billion barrels of crude in storage, giving it room to pull back purchases when prices spike.
Goldman's head of oil research, Daan Struyven, told Bloomberg TV that China will continue to act as a stabilizing force in global crude markets by adjusting purchases to cap price peaks.
This reflects a buyer that is far from passive — with inventories that large, Beijing can simply choose not to buy when the price is wrong.
Longer term, how much room does oil demand have to grow?
Sinopec's chairman said last month that China's oil demand may have peaked in 2025.
IEA data show rapid EV adoption displaced roughly 1.5 million bpd of oil demand in Q2 this year.
This means → high inventories plus structural demand decline leave the sustainability of this buying rebound very much in question.
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