China has been insulated from much of the extreme price volatility that followed the outbreak of war in Iran on February 28.
After the effective closure of the Strait of Hormuz – through which 20% of global energy supplies previously transited – Brent crude LCOc1 surged from around $72 a barrel to a peak of $118 in late March before retreating to pre-war levels by early July. The global benchmark has risen again in recent days as U.S.-Iran strikes picked up.
But as prices rose, Beijing stopped buying. June deliveries plunged more than 41% from a year earlier to 7.12 million barrels per day (bpd), the lowest level since October 2016, extending a sharp decline recorded in May, customs data showed.
The scale of the slowdown, which caught many traders and analysts off guard, turned out to be a critical factor that allowed the global economy to absorb the loss of over 13 million bpd of Middle Eastern exports.
The shift was especially striking given China's importance to world oil markets. The country imported a record 11.55 million bpd in 2025, roughly two-thirds of its total consumption and 16% of global demand.
That dependence would once have made China highly vulnerable to Gulf supply disruptions. Instead, Beijing entered the crisis well prepared.
China’s 4.4% increase in crude imports last year was driven in large part by an aggressive stockpiling campaign that left it with an estimated 1.3 billion to 1.5 billion barrels in storage, equivalent to more than 100 days of average imports.
But cutting imports was only part of the strategy.
In March, China also suspended exports of refined products, including gasoline, diesel and jet fuel, in order to ensure its domestic market was well supplied. The controversial move worried Asian countries, including Australia, Bangladesh and the Philippines, which were already grappling with acute fuel shortages.
To put that number into context, Beijing exported around 800,000 bpd of fuels in 2025, or roughly 12% of Asian refined fuel imports.
The government partially eased the restrictions in July, relieving Asia's fuel market. Yet the episode demonstrated how quickly Beijing can tighten supplies if conditions deteriorate again.
XLE•
