China's Reduced Oil Imports Help Stabilize Global Markets Amid Strait of Hormuz Disruption

More than 100 days into the U.S.-Iran war, fears of $200-per-barrel oil have not materialized, with Brent crude trading between $90 and $100 despite commercial ship traffic through the Strait of Hormuz collapsing to near zero. China, the world's largest crude importer, has slashed purchases from roughly 11–12 million barrels per day to approximately 7–7.8 million barrels per day in May — the lowest level in nearly a decade — absorbing about 74% of the global import decline, according to J.P. Morgan. The country has drawn down refinery inventories by an estimated 15 million barrels in May alone while its strategic petroleum reserves have actually grown slightly, suggesting China holds far larger underground or undisclosed stocks than publicly acknowledged. Structural factors including rapid EV adoption — which analysts estimate has cut Chinese fuel demand by around 1 million barrels per day this quarter — reduced refinery runs, and changing consumer behavior have amplified the demand reduction. Societe Generale notes that while today's 14% supply loss has pushed prices only 30% higher, the 1973 OPEC embargo cut just 7% of supply yet caused prices to surge 134%, underscoring how extraordinary the current market resilience is. However, analysts at SocGen, Kpler, and the Oxford Institute for Energy Studies all warn that Chinese refinery inventories provide only roughly 60–75 days of cover at current import rates, meaning pressure to return to the market could emerge as early as August, and that strategic reserves will ultimately need to be rebuilt at higher prices. OPEC has meanwhile lowered its 2026 global oil demand growth forecast for the second consecutive month to 970,000 barrels per day, while the EIA and IEA both project outright demand declines this year.