China Increasing Crude Imports Can Push Prices Up

Chennai: After reducing oil purchases from March, China is likely to make a full-fledged return to the crude market soon and this will push crude oil prices to higher levels, finds Kpler. If Chinese refiners buy Russian crude more, India will face tough competition for crude stocks.

Chinese refiners had scaled back crude buying from both sanctioned and compliant markets amid elevated oil prices and weak refining economics.

China’s seaborne crude oil imports are forecast to fall to their lowest level in almost a decade at 6.78 mbd in May, down from 8.5 mbd in April and an average of 10.66 mbd in 2025.

The sharp slowdown in Chinese crude imports is now outpacing refinery run cuts. State-owned refiners may increasingly find room to return to the crude market in the coming weeks.

The current oil market balance remains tighter than it appears. Once China returns to the crude market, physical prices could reprice sharply higher, said Kpler.

Physical crude oil benchmarks appear to have settled into a $100-$120/bbl range over the past two months, after the initial wave of panic buying during the first month of the US-Iran war briefly pushed prices above $150/bbl. One key reason oil prices have not sustainably moved above $150/bbl despite a structural supply loss of 8 mbd from the Middle East is the reduction of Chinese buying in the market.

Chinese independent refiners would increasingly buy Russian crude and compete for barrels currently taken by other buyers such as India.

Once China decides to return to the market — likely affecting July onward-loading cargoes — the balance could quickly shift from “tight” to “significantly tighter”, especially as European and American refiners ramp up operations to meet peak summer demand amid low fuel inventories.