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China's current crude stockpiling support to the oil market is set to fade
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Report summary
China's historical surge in oil demand has spurred major investments in refining and storage infrastructure. However, a structural shift is underway as domestic oil demand is projected to decline from 2027, leading to a reduction in refinery activity and crude import needs. China has built substantial stockpiles by importing excess crude, reflecting a broader energy security agenda. As of end-2024, storage utilisation remained modest at around 55%, despite rapid capacity expansions. China's continued stockpiling, even amid high global oil prices, suggests a strategy to capitalize on discounted sanctioned crude and optimise underutilised infrastructure. This trend is expected to continue through 2026, with storage use reaching 70%. However, once storage approaches full capacity, China's incremental demand for crude stockpiling could fall sharply—by as much as 1 million b/d —removing a key source of global demand and potentially exerting downward pressure on international oil markets.
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