China’s imports crashed to a decade-low in June as the reduced flows through the Strait of Hormuz hiked oil prices and reduced refiners’ appetite for costly crude.
Overall, Chinese imports of crude oil plunged by 41.3% in June from a year earlier, to just 29.27 million tons, or 7.12 million barrels per day (bpd), according to official Chinese customs data released on Tuesday.
The June volumes hit a decade low as they were at their lowest level since October 2016, according to the data series.
Chinese crude oil imports extended the decline from May, falling by another 12% in June from the prior month.
Imports in May had crashed to an eight-year low, and further slid in June to a decade-low.
Refinery runs also crashed in May to a four-year low, as Chinese crude processors curbed run rates amid high feedstock prices and export restrictions on fuels.
Run rates further slipped in June, to an estimated 57.72% last month, down 3.28 percentage points from May, according to data by China-based consultancy Oilchem cited by Reuters.
China’s huge stockpiles amassed before the Iran war began and its ability to curtail imports during the first four months of the conflict have kept oil prices from spiking to record highs despite the loss of more than 10 million bpd of daily flows through Hormuz.
China is the world’s top crude importer, but it was also the importer best prepared to weather a global supply crisis. In the year before the Iran war started, China is estimated to have amassed between 1.2 billion and 1.3 billion barrels of oil in commercial and strategic reserves. These could be even higher as the inventories are a closely guarded secret, as are China’s imminent plans about stockpiling or drawing down reserves.
A week ago, China was largely expected to begin raising its crude oil imports soon as flows from the Middle East started to recover and prices fell back to pre-war levels.
But the latest events in the region, with re-escalation and a renewed U.S. blockade on Iranian oil exports, are hiking oil prices again and risking a protracted supply crisis, a prospect that too many market participants may have dismissed too early.
