Ramble On: Who Pays the Freight?

In September, China's crude imports remained flat while refinery runs surged to a five-month high. The country drew on its crude reserves for the fourth time in five months, netting a shortfall of 0.60 mbpd. With only 31 million barrels remaining from April's stockpile, the reserves would be depleted by late November at the current import pace of 0.59 mbpd.

Gulf crude, which once flowed freely through the Strait of Hormuz, now traverses a more circuitous route via tankers and VLCCs. This relay route saw a significant increase in loadings at hub ports, such as Fujairah and Oman, rising to about 8.5 mbpd, five times their 2025 average.

China's reliance on its stockpile and Gulf crude for its oil needs raises questions about the cost implications of rebuilding its crude imports. The cheapest barrels have already been diverted from the Gulf, with Iranian crude largely exiting the Gulf following the US blockade in April. China is now left with a choice between its dwindling stockpile or purchasing Gulf crude, which has higher freight costs due to the increased difficulty of accessing the Strait of Hormuz.