China’s crude oil imports fall sharply during Iran war, moderating prices

The world’s largest crude oil importer just stepped off the gas. China’s monthly crude imports plummeted to 33.08 million metric tons in May 2026, roughly 7.8 million barrels per day, marking an eight-year low and a 29% year-over-year decline from May 2025 levels.

That pullback, driven by the Iran war and the closure of the Strait of Hormuz beginning in early March, has done something few analysts predicted: it kept global oil prices from spiraling into triple-digit territory during one of the most significant supply disruptions in decades.

How China became the oil market’s pressure valve

Before the conflict escalated, China was importing between 11 and 11.7 million barrels per day. By late May, that figure had dropped below 9 million bpd.

The Strait of Hormuz closure removed roughly 20% of global oil supply flows from the market. J.P. Morgan analysts attributed much of the global adjustment to China’s actions, describing the country as a “pressure valve” that curtailed steep price spikes during the onset of the conflict. Brent crude has been held under the $90 to $100 per barrel range, a remarkable outcome given the scale of the supply shock.

China reduced imports because it could afford to, at least temporarily. Beijing has been quietly building strategic petroleum reserves for years, with estimates placing the country’s stockpiles somewhere between 900 million and 1.4 billion barrels.

Teapot refiners take the hit

The country’s independent refiners, colloquially known as “teapot” refiners, have been hit particularly hard. These smaller operations built their business models around discounted crude from Iran and Russia, purchasing barrels at prices well below international benchmarks. With Iranian crude effectively removed from the market due to the conflict and Hormuz closure, those teapot refiners lost access to their primary source of cheap feedstock.

The larger state-owned refiners, with more diversified supply contracts and better access to strategic reserves, have fared comparatively better.

What this means for investors

China cannot draw down strategic reserves indefinitely. A country consuming north of 15 million bpd burns through reserves quickly. If Beijing needs to rebuild those stockpiles while the Strait of Hormuz remains contested, it will eventually need to increase purchases, and analysts have flagged that this delayed demand could push prices meaningfully higher in the second half of 2026.

For energy investors, the key variables to watch are China’s monthly import figures and any signals about the pace of strategic reserve drawdowns. If imports start ticking back up toward 10 or 11 million bpd while Hormuz remains disrupted, the supply-demand math gets uncomfortable quickly.

Asian economies that traditionally rely on Middle Eastern crude, including Japan, South Korea, and India, are all navigating the same supply constraints.

Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.