What’s Driving China’s Sharp Decline in Oil Imports?

The conflict in the Middle East sent oil prices surging and once again exposed the vulnerability of global energy markets to disruptions in the Strait of Hormuz, through which around one-fifth of the world’s oil supply passes. Against that backdrop, China’s crude oil imports fell sharply in May, reaching their lowest level in more than eight years. According to the latest data released by the General Administration of Customs of China, China’s daily crude oil imports stood at 7.8 million barrels per day in May 2026. The daily import volume dropped by 3.02 million barrels compared with April, a month-on-month decline of 28%. Compared with the import peak in February, the daily reduction reached nearly 4 million barrels, equivalent to the total daily export volume of a medium-sized, oil-producing country. This import decline is not a seasonal fluctuation, but a compound reduction driven by proactive regulation, supply-demand interaction, geopolitical developments, and refined oil export controls, carrying medium- and long-term industrial implications.

Why Imports Have Fallen

Several factors have contributed to China’s sharp reduction in crude oil imports.

One factor has been proactive purchase reductions by refineries to hedge against high international oil prices after geopolitical tensions in the Middle East disrupted shipping in the Strait of Hormuz, pushing Brent crude to a peak of $126 per barrel. A severe price inversion appeared between crude oil spot and futures prices.

Domestic state-owned refineries and private independent refineries substantially cut overseas spot purchases to avoid high-price stockpiling risks, suspended premium medium- to long-term contracts, and prioritized consumption of floating stock and in-transit crude oil reserves, voluntarily curbing imports as part of cost-control efforts.

Another factor has been a national strategic purchase adjustment to stabilize global oil prices and enhance China’s energy pricing power. As the world’s largest crude oil importer, China acts as a core stabilizer of global energy prices. Leading global energy institutions have concluded that this import cut reflects voluntary purchase adjustment rather than insufficient domestic demand.

By curbing crude oil purchases moderately, China can restrain capital speculation on crude prices, ease global energy inflation triggered by Middle East geopolitical conflicts, and balance pricing power with major oil-producing countries via purchase volume regulation, helping control annual oil procurement costs.

Inventory Management

China significantly expanded crude oil stockpiling during the past low-price cycle, with national strategic petroleum reserves and coastal bonded commercial inventories remaining at a high level.

Inventory replacement was implemented in May: Overseas purchases were reduced amid high oil prices, while existing crude reserves were released in an orderly manner to guarantee domestic refining supply. Port storage capacity was also close to saturation, restricting crude oil berthing and unloading.

Structural Changes in Demand

Domestic demand has also weakened, contributing to a lower refining operating rate. Part of this is a structural decline in refined fuel demand following its apparent peak in China, with the rising penetration of new energy vehicles driving gasoline consumption down by 2.4% year on year, while the electrification of industrial logistics reduced diesel consumption by 4.4% year on year.

Alternative raw material sources have also matured, with large-scale coal-to-olefin and coal-to-oil projects replacing crude oil for chemical production and cutting crude feedstock demand from refineries. Shrinking profit margins for refined oil and petrochemical products have also forced private refineries to reduce operating rates and crude oil intake.

The longer-term energy transition has reinforced this trend. Under the implementation of national carbon peaking and carbon neutrality assessment rules, the proportion of nonfossil energy consumption keeps rising. Wind, solar, energy storage and other forms of green power are increasingly replacing fossil fuel use in industry, urban transportation and mining sectors.

Incremental crude oil demand has largely disappeared, transforming China’s crude oil import logic from incremental supply-oriented imports to stock replacement-oriented imports. The May import drop reflects this broader long-term trend in China’s energy transition.

Refined Oil Export Controls

Since the second quarter of 2026, China’s National Development and Reform Commission and Ministry of Commerce have tightened refined oil export supervision. Starting in May, the government adopted vessel-by-vessel approval and stringent export quota controls for oil products.

The policy’s logic is to avoid domestic crude resource outflows and imported global inflation under high oil prices, thereby reducing crude import demand. It does this by prioritizing domestic refined oil supply security and strictly capping export volumes of gasoline, diesel and fuel oil. The direct impact has been to reduce refining capacity dedicated to overseas markets, leading to lower crude processing demand.

The Strategic Logic

There are a few strategic choices behind China’s import reduction. Cost is one: reducing purchases at high prices and replenishing reserves at low prices to stabilize annual procurement costs.

Geopolitics is another, with Beijing seeking to restrain global oil speculation and balance international energy pricing power through purchase volume adjustments. By restricting refined oil exports, China is also seeking to strengthen domestic energy security.

The energy transition is a third, as the country looks to enhance its energy independence by relying more on new energy, electric vehicles, the coal-to-chemicals industry and national oil reserves.

Thus, China’s crude import decline results jointly from market cost control, strategic energy policy, the low-carbon transition and refined oil export supervision. Looking forward, this trend is likely to continue, because the country’s approach to energy imports is shifting from passive imports to guarantee supply toward more active management aimed at strengthening pricing power and domestic energy security.

Fu Chengyu is a global energy expert and former chairman of China’s top state-owned oil giants, CNOOC and Sinopec. The views expressed in this article are those of the author.