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As the United States signaled its intention to impose a 20% transit toll on the Strait of Hormuz, analysts say the direction of international oil prices hinges on China's crude purchases.
According to Chinese customs data released on the 13th (local time), crude oil imports in June totaled 29.27 million tons, plunging 41.3% year-on-year to the lowest level since October 2016. According to Chinese consulting firm OilChem, China's crude oil distillation unit utilization rate stood at 57.72% in June, down 3.28 percentage points from the previous month and 13.09 percentage points from a year earlier.
China, the world's largest crude oil importer, sharply reduced its crude purchases after the outbreak of the U.S.-Iran war on February 28. This helped ease concerns that oil prices could surge to $200 due to a closure of the Strait of Hormuz, as global crude demand declined. The International Energy Agency (IEA) forecast that China's crude oil consumption this year is likely to record a meaningful decline for the first time since the oil shocks of the 1970s and 1980s. Even if traffic through the Strait of Hormuz slows, a delay by China in expanding its crude imports could restrain any rise in international oil prices.
The market is abuzz with various speculation over how China was able to reduce its crude imports. China holds the world's largest oil reserves, though the exact figures remain unknown. However, since satellite-verified inventories at China's crude storage facilities have not fallen significantly, and refiners' cuts to plant utilization have limits, it is interpreted that reserves alone did not replace the reduced imports.
China's possession of vast coal resources that can be used instead of oil—currently utilized in power generation and elsewhere—along with its high share of renewable energy and the world's largest electric vehicle market, are also cited as factors enabling the country to reduce crude consumption.
Experts noted that the Iran war has diminished the leadership of oil-producing countries such as OPEC, while consumer countries like China have begun to wield influence. Gregory Brew, an analyst at research firm Eurasia Group, said, "Right now, China is exercising greater market power than any other country, including Saudi Arabia or the United States."
