Chinese crude demand recovery stalls as Iranian supply losses tighten market

Chinese crude imports averaged 8.1 million barrels per day in the second quarter of 2026, down 32 percent from the first quarter's level of approximately 12 million barrels per day, as Middle East supply disruptions and the loss of Iranian exports forced refiners to seek costlier alternatives. Beijing had been importing roughly 12 million barrels daily before the conflict and producing another 4.4 million barrels domestically, with surplus volumes directed into strategic stockpiles that reached an estimated 1.4 billion barrels by the end of 2025, Reuters reported.

Strategic reserve drawdowns cushion immediate impact#

China's decision to reduce crude purchases removed demand at a moment when global supplies were being squeezed, cushioning the impact on the wider oil market. The country drew on its vast reserves to meet domestic refining needs as access to Iranian crude became increasingly restricted. Iranian crude loadings at Kharg Island, the country's main export terminal, fell from 1.8 million barrels per day in March 2026 to 260,000 barrels per day in May, according to Kpler data cited by Oilprice.com. Chinese imports of Iranian crude dropped to 475,000 barrels per day in September from 980,000 barrels per day in August, with arrivals ceasing from September 26.

Alternative supply routes face disruption#

A pipeline carrying crude across the Arabian Peninsula to the Red Sea was shut, leaving two vital routes for Middle Eastern oil to China both disrupted. Preliminary data from Kpler showed crude exports from major Middle Eastern producers rebounded in September to 12.8 million barrels per day, the highest level since February, supported by increased shipments from Saudi Arabia and the United Arab Emirates, Jordan News reported. Greater volumes of oil exports are leaving the Gulf region through alternative methods such as ship-to-ship transfers, which are less efficient and more costly than normal operations, according to Tim Waterer, an analyst at KCM Trade quoted by Jordan News.

Price pressure builds as refiners compete for barrels#

Brent crude futures rose 0.6 percent to $105.91 a barrel on September 17, while US West Texas Intermediate crude gained 0.8 percent to $93.32 a barrel, Jordan News reported. Chinese refiners are being forced to search further afield for supplies as access to Russian and Iranian crude remains complicated by United States sanctions and other restrictions. That scramble for available barrels is adding pressure on oil prices both in China and globally. Iran's floating stockpile of crude, which stood at about 160 million barrels in mid-April 2026, fell to around 86 million barrels by late September, the lowest volume since January 2025, with 23 million barrels trapped inside the Gulf, according to Kpler data cited by Oilprice.com.

Diplomatic discussions follow supply constraints#

Talks between Chinese President Xi Jinping and US President Donald Trump are scheduled following discussions in Beijing on September 16 between Chinese Foreign Minister Wang Yi and his Iranian counterpart, Abbas Araghchi, Al Jazeera reported. US and Iranian officials said representatives from the two countries held separate discussions with mediators as part of renewed efforts to end the conflict, which began seven months earlier, Jordan News reported. Any upcoming talks are expected to focus on a revised version of a seven-day proposal put forward by Iran last week on the sidelines of the United Nations General Assembly.