Hormuz closure clouds China's crude imports after they hit a 3-month high in July

China's crude oil imports reached a three-month high in July, but this surge may not last long due to the closure of the Strait of Hormuz and persistently low domestic demand. Imports decreased by 24% compared to the same period last year, according to official customs data from Wind Information. Following a U.S.-Iran memorandum that reopened the strait to commercial traffic in mid-June, shipping activity initially rebounded, but attacks on vessels in early July led to a near halt in transits.

This has resulted in higher energy prices and a sharp slowdown in China's crude imports, which fell to 29.3 million tons in June, the lowest level since October 2016. The strategic crude oil reserves in China have reached nearly 1.4 billion barrels, providing a cushion against import disruptions. However, with inventories already substantial, Beijing shows little urgency in restarting imports.

Chinese economists suggest that a sustained de-escalation, rather than a short-term rebound, would be necessary for a significant increase in crude purchases. The potential for renewed shipping via the Strait of Hormuz is currently unclear, as tensions persist between Iran and its trading partners.