China’s crude oil imports fell to 7.8 million barrels per day in May 2026, a 29-33% drop from pre-war levels of 11.6 million bpd, equivalent to Iraq’s output.
The February 2026 Iran war severed a vital supply line, losing 1.4 million bpd from Iran, which constituted 80-90% of its total exports.
Analysts predict a permanent loss of 200,000 to 600,000 bpd of transportation fuel demand due to the war and increased electric vehicle adoption. China's independent refineries, reliant on discounted Iranian crude, faced operational cuts.
To mitigate the impact, China drew down approximately 1 billion barrels from strategic reserves.
Additionally, the Strait of Hormuz faces logistical complications. Iran is now accepting Bitcoin for tanker tolls, intertwining energy markets with cryptocurrency and raising volatility concerns.
For investors, reduced Chinese demand acts as a counterbalance to supply disruptions. A decline of 3-4 million bpd in Chinese volume may stabilize global prices, despite supply losses pushing them higher. A permanent demand loss indicates a shift towards China’s energy transition, with potential future spikes in demand as stockpiles are rebuilt under new cost dynamics.