Overview
- China began drawing down commercial crude inventories in May and analytics estimate almost 25 million barrels were withdrawn through early June to replace lost Middle East shipments.
- Monthly crude imports fell sharply in May to an eight‑year low, reducing China’s need to buy on world markets and helping keep Brent from shooting into triple‑digit territory.
- State refiners have cut processing to record lows and fuel exports have been limited to preserve domestic supply, while smaller independent 'teapot' refiners have lost access to discounted Iranian barrels and face acute stress.
- Energy analytics project continued inventory draws of about one million barrels per day in the near term, but officials will only permit a large return to international buying if reserves are meaningfully tapped and Beijing approves.
- The country’s large but opaque stockpiles give China short‑term flexibility, yet sustained Hormuz disruption or a push to rebuild those reserves could reverse the current price moderation and renew upward pressure on global markets.