In the current escalation of tensions in Middle East with the attack of Israel last Friday on the nuclear plants of theIran, the major concerns for world economies are related to apossible interruption of the supply of Petroleum by Tehran. Special observation is the Strait of Hormuz, from which it passes one fifth of the world's oil.
Even the China is worried and runs for cover by continuing to stockpile crude oilBeijing, which is the world's largest oil importer, in fact, it refines a significantly smaller quantity to that available from imports and domestic production, according to a report by Reuters. By putting hay in the barn, China should thus be able to purchase smaller volumes in the coming months, protecting itself from further appreciation of crude oil due to tensions in the Middle East.
According to calculations based on official data, China's crude oil surplus reached 1,4 million barrels per day (bpd) in May, the third consecutive month in which it exceeded the 1 million bpd level.
Il Oil prices crude oil has skyrocketed since 13nd June, when Israel launched a series of air strikes against Iran, prompting Tehran to respond with drones and missiles. While the conflict has not yet affected Iran's crude oil production and export facilities, risks have seen oil futures Brent rise nearly 6% from its June 12 close, settling above $74 a barrel in Europe today.
In the past, when crude prices rose rapidly, Chinese refiners responded by reducing imports and using their existing oil. Given that it takes up to two months from the preparation of cargoes to their delivery, any decline in Chinese imports will only become apparent starting in August.
Beijing moved early, taking advantage of crude oil swings
While much will depend on the development of crude oil prices in the coming weeks, it is certain that China has considerable room for manoeuvre. reduce imports and exercise a downward pressure on prices. Beijing does not disclose the volumes of crude oil entering or leaving from strategic and commercial reserves, but it is possible make an estimate subtracting the amount of oil processed from the total crude available from imports and domestic production, according to the report Reuters.
According to official data released yesterday, refineries processed 13,92 million barrels per day in May, down from 14,12 million barrels per day in April and also 1,8 percent lower than a year earlier. Crude imports stood at 10,97 million barrels per day in May, down from 11,69 million barrels per day in April, while domestic production was 4,35 million barrels per day, up slightly from 4,31 million barrels per day in April.
Adding the May imports e national production This gives a total of 15,32 million barrels per day of crude oil available to refineries, with a surplus of 1,4 million barrels per day once the refining capacity of 13,92 million barrels per day is subtracted.
in this first five months of the year, the available crude surplus rose to 990.000 barrels a day, from 880.000 barrels a day in the first four months.
In the first two months of 2025, Chinese refineries actually processed about 30.000 barrels per day more than what was available from crude imports and domestic production: it was first time in 18 months that have drawn from supplies. But the huge surpluses of March, April and May have reversed the previous trend. It may be that not all of this excess crude was added to storage, as it was not captured by official data. But even taking into account the gaps in the latter, it is clear that from March onwards China has imported crude oil to a much higher pace than is necessary to satisfy its internal fuel needs.
One indication of how sensitive Chinese refiners are to prices is the strong crude oil imports planned for June: LSEG Oil Research forecasts 11,72 million barrels per day. That would be an increase of 750.000 barrels per day from April’s official figures, taking advantage of swings in oil prices: Brent futures fell from a six-week high of $75,47 per barrel on April 2 to a four-year low of $58,50 on May 5.
Most of these shipments will arrive in June and July and will likely give the illusion of a recovering demand for Chinese crude. However, weak crude processing data suggests that China is likely storing crude instead. After that, as prices rise amid tensions in the Middle East, refiners are likely to reduce purchases and look for discounted oil from sanctioned exporters such as Russia and Iran.
