Interlocking Rings: Why Does China Import Sanctioned Oil?

Data released by China’s General Administration of Customs show that in 2025, China’s total crude oil imports increased by nearly 5% year-on-year (actual growth: 4.9%), with the average daily import volume rising from 11.1 million barrels per day (bpd) in 2024 to 11.6 million bpd. Niels Rasmussen, Chief Shipping Analyst at the Baltic and International Maritime Council (BIMCO), stated: “Maritime crude imports are projected to grow by 4.0% year-on-year. According to estimates by the U.S. Energy Information Administration (EIA), China’s average daily crude inventory build is slightly below 1 million barrels—meaning domestic crude import demand has effectively declined by nearly 500,000 bpd.” [2] The global crude tanker shipping market is highly dependent on China’s crude imports: China’s crude import demand directly accounts for over one-fifth of global crude tanker cargo volume and approximately 30% of global ton-mile shipping volume. Crude trade routes from the Persian Gulf, Brazil, and Russia are especially sensitive to changes in China’s import volumes. Year-on-year shifts in import origins reveal that the average maritime distance of China’s crude import routes shortened by nearly 1%, thereby capping growth in tanker ton-miles at 3.2%. Rasmussen noted: “The shortening of China’s average maritime import route distance stems primarily from a shift in U.S. crude sourcing—from cargoes loaded at Gulf of Mexico ports to those loaded at U.S. Pacific Northwest ports. In 2025, China’s crude imports from the U.S. plummeted 61% year-on-year, while imports from Canada surged 313% year-on-year.” China’s decline in U.S. crude imports began in February 2025, when China imposed additional tariffs on U.S. crude oil; imports have not recovered since. Canada’s export growth has been supported by the expansion of the Trans Mountain Pipeline, which increased crude deliveries to Vancouver Port. Bilateral consultations between China and Canada are underway, and Canada has proposed raising its crude exports to China by 50% by 2030—suggesting further growth ahead. In 2025, China’s overall crude import growth was driven mainly by increased exports from Brazil and Canada; meanwhile, U.S. and Russian exports to China posted the steepest declines. Notably, Russian crude accounted for 11% of China’s seaborne crude imports—and, as of now, intensified U.S. sanctions have yet to significantly impact this volume. Although supported by inventory restocking demand, China’s seaborne crude imports grew by less than 1% year-on-year in the first half of 2025, weighed down by a Q1 import decline. In fact, 56% of China’s full-year 2025 crude import growth came from Q4—and nearly 80% of the growth in seaborne imports originated in Q4 alone. This Q4 surge coincided with worsening global supply oversupply and Brent crude averaging below USD 65 per barrel. Rasmussen added: “For 2026, both the EIA and the International Energy Agency (IEA) project China’s crude consumption will rise by only 200,000 bpd year-on-year (a 1.2% increase).”

Goldman Sachs estimates global crude oil inventories are approaching the critical 100-day threshold, with visible inventories expected to cover just 73 days of demand—what does this mean?

The bar chart below displays crude oil net import data (imports minus exports, in USD) downloaded from China’s General Administration of Customs, converted into metric tons. We then calculated a correction factor by comparing net import data from 2018–2023 against official statistics from the National Bureau of Statistics—yielding a factor of 0.886. This correction factor was applied to 2024 and 2025 data, and after subtracting domestic consumption, we estimated the volume of newly stored crude oil. Based on this methodology, we conducted a simple tiered classification of new crude storage—producing the results shown. Under this neutral scenario, China’s end-2025 crude oil reserves reach 1.343 billion barrels. Thus, these three scenarios mutually corroborate each other, enabling us to estimate China’s end-2025 crude inventory level. 3. Inventory Coverage Capacity In the first section, we estimated China’s 2026 crude consumption at 760 million metric tons. Domestic refining operations appear stable, so we assume even monthly consumption. As of end-July, cumulative consumption stands at approximately 440 million tons. Domestic crude production, per National Bureau of Statistics data through end-June, totals 110 million tons. Per General Administration of Customs data, net crude imports amounted to USD 15.104 billion—converted using our prior methodology to 218 million tons. Based on these figures, end-2025 inventory equates to roughly 160 days of net imports. Summing domestic production and net imports yields 328 million tons; adding July’s consumption (estimated as one-sixth of H1’s total) brings the cumulative to 383 million tons. Subtracting this from total demand reveals a shortfall of 57 million tons—or 426 million barrels. That is, since the start of the year, roughly one-third of China’s end-2025 crude inventory has already been consumed. As evident from the chart above, net imports clearly declined during April–June. If we extrapolate remaining inventory duration based on Q2’s average import pace, the result is: Under current low-import conditions, remaining crude inventory can sustain operations for 1.88 quarters—approximately 170 days. 4. International Perspective 4.1 EIA The EIA directly reports China’s crude import volumes—but these also originate from China’s General Administration of Customs, limiting their independent value: Units are in million barrels—equivalent to ~32.7 million tons per month. Hmm… this differs somewhat from data I found elsewhere—likely due to differing oil price assumptions used in unit conversion; the EIA appears to use a higher assumed price… Yet the EIA also notes: China’s import decline (−390 kb/d) outpaces the drop in refinery consumption (−220 kb/d), accelerating inventory drawdown. 4.2 OPEC OPEC forecasts China’s 2026 oil demand at 17 million barrels per day—the meaning of the subsequent figure is unclear, possibly an absolute change. Converted using 0.1346 tons per barrel, this equals ~83.5 million tons—falling at the upper bound of our earlier fitted projections, representing an extremely optimistic consumption outlook. However, I consider this unlikely. Moreover, OPEC observes: China’s massive crude inventories were a key factor suppressing sharp oil price spikes during the first half of the year amid geopolitical tensions—providing indirect evidence of China’s substantial ‘crude buffer’. 4.3 IEA

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