China's June Crude Imports Head for Decade Low as Storage Draw Masks Demand Hit
China's crude oil imports this month are on course for their weakest level since October 2016, according to Kpler data cited by Bloomberg, with the daily average running at just 6.4 million barrels — a figure that strips away the buffer China's vast strategic reserves have provided since the Strait of Hormuz closure began.7
The import rate matters because it exposes a gap between apparent and actual demand. China has been drawing heavily on an estimated 1.2 to 1.3 billion barrels of crude reserves accumulated over two decades, enabling refineries to keep running even as seaborne supply dried up. That drawdown has delayed the full market signal, but it cannot continue indefinitely at current rates.2
June's 6.4 million barrel daily average represents an 8% decline from May's already depressed volumes, according to Bloomberg. Customs data showed May averaging 7.82 million barrels per day — itself down 29% year-on-year and 17% from April. Against February, before the war disrupted Hormuz traffic, May imports were 38% lower. The cumulative shortfall from February levels now stands at roughly 4 million barrels per day.7
State-owned Chinese refiners have responded by cutting throughput to multiyear lows, Bloomberg reported in May, as the near-halt to Hormuz shipments throttled the supply they needed.4 But the cuts in actual processing have lagged the apparent import data — storage releases have kept feedstock flowing longer than raw import figures would suggest. As inventories erode, that lag closes.
Demand destruction estimates vary widely. Rystad Energy puts the hit at between 200,000 and 600,000 barrels per day from pre-war levels and does not expect a full recovery by year-end. Energy Aspects puts the permanent demand loss at 300,000 barrels per day. FGE NexantECA is more severe: it expects China's oil import drop for the current quarter to reach as much as 3.3 million barrels per day.7 The range reflects genuine uncertainty about how much of the slowdown is supply-constrained refineries temporarily stepping back versus a durable shift in industrial activity.
Data from the Centre for Research on Energy and Clean Air adds context to the industrial picture. China's total power generation rose an estimated 6.6% year-on-year in April, but crude and natural gas imports fell roughly 20% and 13% respectively on the same comparison, as Hormuz disruptions weighed on feedstock supply. Coal-fired generation rose for a fourth consecutive month as a result.1
ICE Brent crude front-month settled near $72.09 on Friday (2026-06-26), down sharply from the $109.26 close recorded on Friday (2026-05-15) as China offered no signals it would press Iran to normalise tanker traffic. That retreat of nearly $37 per barrel since mid-May reflects a market revising down its demand assumptions as the Hormuz closure drags past two months, despite the ongoing supply shock. The IEA warned in early May that global oil inventories had declined at a record pace, with 164 million barrels released by governments and industry as of May 8 — and analysts estimated the cumulative supply loss had already exceeded 1 billion barrels, far beyond the IEA's planned 400 million barrel release.5
The arithmetic on China's draw is the signal traders are watching most closely. Morgan Stanley's Martijn Rats flagged in May that crude previously held in underground storage had moved above ground to cover the shortfall, and that such drawdowns were likely to accelerate as refineries exit maintenance.6 Frederic Lasserre, head of analysis at Gunvor Group, warned in late April that another month of Hormuz closure would drain global stockpiles to effective "tank bottoms."3
What makes the current Brent level difficult to read is precisely this uncertainty over Chinese demand. If the 300,000 barrel permanent loss estimate from Energy Aspects is closer to correct, the market is repricing China's long-run import baseline, not just a temporary disruption. If Rystad's upper-end 600,000 barrel figure applies, the downgrade is deeper.7
The risk hanging over the oil balance is asymmetric. A Hormuz reopening would restore physical supply but would hit a market in which China's appetite has demonstrably shrunk, refineries are running below capacity, and storage that once amplified Chinese demand signals is now depleting rather than building. Some analysts expect Chinese demand to never return to pre-war levels. Whether that proves correct will likely determine whether the post-reopening price snap-back materialises — or whether $72 becomes the new ceiling rather than the floor.7