China's Oil Imports Plunge 41 Percent, Tempering Fuel Price Surge

China’s crude oil imports fell 41 percent in June to 29.27 million tonnes — their lowest level since October 2016 — providing an unexpected buffer against the energy price shock many analysts predicted when US-Iran fighting erupted in the Strait of Hormuz.

The scale of the pullback matters because China imports more crude than France, the United Kingdom, and Germany combined. Its June demand hole offset fears of a severe supply disruption, keeping the global oil rally contained even as combat operations intensified in and around the world’s most critical petroleum chokepoint.

Oil prices climbed from roughly $69 to $79 per barrel as fighting escalated. US retail gasoline prices averaged approximately $3.87 per gallon — a 30 percent increase from the roughly $3 per gallon that prevailed before February — but fell about 10 percent in June, tracking the pullback in Chinese demand.

Why China’s Imports Fell

Three factors converged to suppress the June figure. First, Beijing spent the opening months of 2026 building strategic stockpiles in anticipation of conflict, front-loading purchases that its refineries did not need to repeat in June. Second, China’s economy has slowed sharply, reducing industrial energy consumption across manufacturing and transport sectors. Third, Chinese refiners accelerated a coal substitution strategy: coal imports surged 30 percent in June to a five-month high as power plants and heavy industry shifted away from oil-based feedstocks.

China normally draws crude from Russia, Saudi Arabia, Iraq, Iran, and Brazil, among others. The June drop came as each of those supply relationships faced varying degrees of geopolitical disruption — yet the overall import figure still fell dramatically, reflecting the depth of the demand contraction rather than supply-side rationing.

The Hormuz Equation

The backdrop is an active military confrontation. US Central Command has conducted multiple rounds of strikes on Iranian military sites and infrastructure, including a strike wave this week that targeted Hormuz-area facilities and disrupted tanker traffic. Iran has retaliated, striking US forward positions in Kuwait, Jordan, and Bahrain.

Roughly a fifth of the world’s petroleum passes through the Strait of Hormuz. Early in the conflict, forecasters warned that a prolonged closure could push Brent crude above $100 per barrel. That threshold has not been tested, in large part because China’s demand hole reduced the global pressure on available supply.

A Memorandum of Understanding has extended a spring ceasefire, and Iran received temporary sanctions relief in exchange for permitting vessel transit through the strait without collecting tolls, according to Middle East Eye. The arrangement has kept commercial shipping moving and limited the physical supply shock that markets feared.

A Fragile Buffer

The equilibrium is unstable. Iran has attacked vessels belonging to Saudi Arabia, Qatar, and the United Arab Emirates in recent weeks, raising the risk that Gulf exporters could be drawn into a broader conflict. A sustained disruption to Saudi or Emirati export infrastructure would remove the supply cushion that markets have used to absorb Hormuz volatility.

US strikes on targets in southern Iran have drawn international criticism and intensified diplomatic pressure on both parties to negotiate terms that outlast the current ceasefire extension. How long the MOU holds — and whether Iran’s attacks on Gulf shipping escalate into something larger — will determine whether the June demand figures represent a temporary cushion or the opening of a more durable price stabilization.

What the Data Means Going Forward

China’s average crude import rate stood at 11.6 million barrels per day across 2025. A rebound toward that pace — driven by economic stimulus, stockpile depletion, or a resolution of the coal substitution economics — would translate quickly into renewed upward pressure on global oil prices. The same Hormuz constraints that have kept supply tight would amplify any demand recovery.

For now, drivers filling up in June paid less than they did in May. Whether that trend holds through July depends on whether fighting around the strait remains contained and whether the ceasefire extension survives further provocation from either side.