The Next Key Variable for Oil Prices: When Will China Resume Large-Scale Restocking?
Miles Bennett
The Iran war blew a 14-million-barrel-per-day hole in global crude supply and pushed prices toward $120. China's decision to slash imports by a third is the single biggest reason oil never hit $200.
How much did China actually cut?
China's daily crude imports fell below 8 million barrels in May — an eight-year low — down more than 30% from the pre-war average of 11.6 million bpd.
This means → one country pulled roughly 3.6 million barrels a day of buying power off the global market, equivalent to erasing the entire output of a mid-sized producer.
Jason Bordoff, founding director of Columbia University's Center on Global Energy Policy, called the drop in Chinese imports "one of the most important reasons" oil prices have not surged further.
How is China managing without those imports?
Beijing deployed three levers at once: tapping strategic reserves, cutting refinery utilization, and burning more coal — sharply reducing reliance on external supply.
Kpler senior oil analyst Muyu Xu estimates commercial stocks can sustain about 1 million bpd of draw-down for roughly two months; official strategic reserves hold an additional ~1.23 billion barrels.
In plain terms = even after commercial stocks run dry, Beijing still has a vast "petroleum great wall" in reserve — enough to extend the current stance well into next year. But dipping into that stockpile would erode an energy-security buffer built over many years, so Beijing will delay as long as possible.
Michal Meidan, head of China energy research at the Oxford Institute for Energy Studies, noted that China has not needed to enter the market for large-scale replacement barrels — a fact that has effectively capped price gains.
How much is the clean-energy transition helping?
China's installed wind and solar capacity is roughly twice that of the rest of the world combined; its EV production and sales also lead globally.
This means → structural demand for gasoline and diesel is shrinking — even after the war ends and imports recover, China's appetite for oil is unlikely to return to its former peak.
This reflects something larger: China's import cut is not just a short-term wartime measure — it sits on top of an irreversible shift in the country's energy mix.
How much do U.S. output gains and "dark ships" add?
U.S. crude production has risen to a record high, providing some supplementary supply to global markets.
Small volumes still leak out of the Persian Gulf via overland pipelines, tankers paying transit fees, and "dark ships" running with transponders off — but the scale is limited.
In plain terms = U.S. extra barrels and grey-market flows are band-aids. The real force keeping oil prices in check is China's demand withdrawal.
What drives the next move in oil prices?
After the preliminary U.S.–Iran deal was announced, Brent crude fell more than 4% Monday to around $83 — its lowest since early March.
Yet the deal text remains unpublished, the Strait of Hormuz is not yet physically reopened, and tanker misalignment plus elevated insurance costs will take time to unwind.
This means → when China restarts large-scale restocking is the pivotal variable for the next phase. Once Beijing decides prices are low enough and re-enters the market, its purchases will put a new floor under oil.
Content is for reference only, not financial advice.