China Added 200,000 Bpd to Crude Reserves in July Despite Hormuz Crisis

In July, China reportedly added approximately 200,000 barrels per day to its substantial crude oil reserves, according to calculations by Reuters columnist Clyde Russell. This increase occurred as imports rebounded from a decade-low in June and refinery output remained low. The Middle East crisis had begun to impact China's oil imports in May, as the country had amassed approximately 1.4 billion barrels of crude oil in its commercial and strategic stocks at the start of the Iran conflict.

Unlike the United States, China does not disclose its inventory figures. Analysts assess China's crude stockpile by considering overall supply, which includes domestic production and imports, along with refinery processing rates. Based on this method, Reuters' Russell estimated that China had 210,000 bpd of crude oil available for storage in July, derived from a total of 12.72 million bpd of crude availability, comprising 8.41 million bpd of imports and 4.3 million bpd of domestic production, and a refinery throughput of 12.51 million bpd.

Despite the crisis, which began with the closure of the Strait of Hormuz, China's crude oil stockpile has largely remained stable, around 1.2 billion barrels, five months after the initial disruption. Following the Middle East conflict, China reduced its overall crude oil imports, and its refiners lowered production rates while authorities restricted fuel exports to safeguard domestic supply.

However, the easing of fuel export restrictions in July led to a resurgence in crude oil imports, marking a departure from the ten-year low recorded in June. This unexpected rebound in imports likely facilitated stockpiling, surprising the market and potentially signifying persistent weakness in domestic demand and refining volumes.