China's Record Oil and Gas Output Drives Crude Imports to Nine-Year Low
The National Energy Administration's July data show domestic supply growth reshaping China's import appetite, with May crude purchases at their lowest since 2017.
China produced a record 216 million tons of crude oil in 2025, with natural gas output rising by 10 billion cubic meters to its own record high, the National Energy Administration reported on July 22 (2026-07-22). Combined oil and gas production in oil-equivalent terms reached 420 million tons for the year, also a record.5
Those output gains are now registering in trade flows. China's crude oil imports fell to an average of 7.8 million barrels a day in May (2026-05), the lowest monthly reading since 2017, reflecting both the growth in domestic supply and shipping disruptions through the Strait of Hormuz that throttled Middle Eastern deliveries.5
The Hormuz factor was severe. Crude oil and natural gas imports fell by around 20% in April (2026-04) as naval tensions choked a major cargo route, according to Centre for Research on Energy and Clean Air analysis. Refiners responded by drawing on stockpiles rather than scrambling for spot cargoes.1
Those stockpiles had been built with this scenario in mind. China had accumulated an estimated supply cushion of around 1 billion barrels ahead of the disruption, per National Energy Administration data. Kayrros, a data firm, estimated that observable stocks grew by a further 110 million barrels between early February (2026-02) and mid-May (2026-05), reaching a record 1.2 billion barrels total, as reported by The Economist. Storage at key facilities was running at around 56% of capacity.5,2
Drawing down that cushion came at a price for refinery margins. Bloomberg reported that Chinese oil processors sharply reduced throughput in May (2026-05), with runs at state-owned refiners dropping to multiyear lows after crude import volumes collapsed. The near-halt in Hormuz shipments pinched a sector that is structurally dependent on Middle Eastern supply.4
Gas told a different story. Record domestic natural gas production helped insulate generators and industrial users from the import shortfall, and broader energy demand growth continued regardless. Total power generation in April (2026-04) rose an estimated 6.6% year-on-year, according to Centre for Research on Energy and Clean Air data, with coal-fired output rising for the fourth consecutive month as weak wind conditions, subdued solar performance, and extended nuclear refuelling outages pushed generation back toward thermal plant.1
Coal imports were already contracting before Hormuz entered the equation. China's coal purchases fell 9.6% in 2025 to 490 million tons, Bloomberg reported, the steepest annual drop in a decade, driven by higher domestic coal production and a rare contraction in thermal power generation that year.3
On the reserves side, Chinese oil and gas companies added 1.32 billion tons of oil equivalent in newly discovered recoverable volumes during 2025, up 5.6% from 2024, the National Energy Administration said on July 22 (2026-07-22). Conventional oil and gas accounted for 1.29 billion tons of that total, with unconventional resources making up the remainder.5
ICE Brent crude front-month was at $79.13 a barrel on August 6 (2026-08-06), fractionally lower on the session, while JKM Asian LNG spot was $20.91/MMBtu and Newcastle thermal coal held at $116.05 a tonne. The relative steadiness across those benchmarks suggests markets have largely treated China's reduced import appetite as a supply-side adjustment rather than a signal of deteriorating demand.
The near-term recovery in Chinese refinery runs is the more immediate variable. Thermal power commissioning in the first quarter surged by more than 160% year-on-year, according to Centre for Research on Energy and Clean Air data, pointing to rising electricity demand growth ahead. Solar capacity additions fell 31% year-on-year in early 2026, though remaining above 2023 levels; wind additions rose 8%. Grid buildout is running ahead of grid balancing capacity, which limits how quickly renewables can displace gas-fired backup.1
What JKM and Newcastle coal traders are effectively pricing is a China that has demonstrated it can sustain record domestic oil and gas output, draw on unrivalled strategic reserves during a supply shock, and still keep electricity demand growing — but with refiners squeezed, stockpiles drawn down from their peak, and any resumption of normal Hormuz flows likely to pull import volumes back up faster than the domestic supply growth narrative suggests.5,2