CHINA tapped its massive crude oil stockpiles for the fourth month in the past five in September as rising refinery processing rates outweighed a slight recovery in oil imports.
However, the recent pattern of drawing on inventories may end in October, with crude imports poised to recover to the most since March, the last month largely unaffected by the United States and Israeli war against Iran, which started on the last day of February.
Refineries processed about 530,000 barrels per day (bpd) more than what was available to them from crude imports and domestic oil production, according to calculations based on official data released this week.
China does not disclose the volumes of crude flowing into or out of its strategic and commercial stockpiles, but an estimate can be made by deducting the amount of oil processed from the total crude available from imports and domestic output.
On this basis, imports of 9.03 million bpd and domestic production of 4.43 million bpd meant refiners had a total of 13.46 million bpd available.
Refineries processed 13.99 million bpd, up slightly from August’s 13.91 million bpd and the most since March, meaning throughput was 530,000 bpd more than available crude.
The September draw on inventories was down from the 640,000 bpd in August, largely reflecting the increase in crude imports from 8.93 million bpd to September’s 9.03 million, an increase of 100,000 bpd.
Even though China has dipped into stockpiles in recent months, strong builds before the start of the Iran conflict mean that there is still a small surplus of crude for the first three quarters of 2026.
Refiners processed 13.73 million bpd in the first nine months of the year, while imports and domestic output totalled 13.97 million bpd, leaving a surplus of 240,000 bpd.
This means that despite the dramatic cut in crude imports seen since the start of the Middle East conflict, China hasn’t reduced its oil stockpile, which is estimated by analysts to contain at least 1.2 billion barrels.
Price impact
What the world’s largest crude importer has done is cut the volume of arrivals in the face of the surge in prices as a result of the war.
Global benchmark Brent futures reached a four-year high of US$126.41 a barrel on April 30, up significantly from the close of US$72.48 the day before the war started as the conflict shut off flows through the Strait of Hormuz, the narrow waterway through which about 20% of global crude and refined fuels moved.
However, flows through the still-contested waterway have risen in recent weeks as Gulf exporters such as Saudi Arabia and the United Arab Emirates risk attacks from Iran.
This has resulted in Brent dropping to below US$80 a barrel in early August, the time when Chinese refiners would have been arranging October-delivery cargoes.
Increased availability and moderating prices will result in China’s crude imports rising to more than 10 million bpd in October, which would be the most since the 11.79 million recorded in March.
China’s seaborne imports are estimated by commodity analysts Kpler at 9.02 million bpd for October, a figure that may be revised higher by as more cargoes are assessed by the end of month.
In addition to the seaborne arrivals, China receives about one million bpd of pipeline imports from Russia and Central Asia.
The likely increase in October crude imports may be enough to cover refinery processing, even if run rates recover to more usual volumes around 14.5 million bpd.
The rising crude imports are already being reflected in storage data collated by EA Crude Oil Inventories.
China’s onshore crude inventories rose for a second week in the seven days to Oct 19, reaching 1.192 billion barrels, up from the 1.189 billion the prior week, the data showed.
Onshore stockpiles had reached a record 1.354 billion barrels on May 4, according to the EA data, meaning they have dropped by 162 million barrels since then.
However, it’s worth noting that they are only down 13 million barrels from the 1.205 billion EA reported for the week ending Oct 20 last year.
This confirms that while China has tapped inventories in recent months, it has barely touched them in annual terms, meaning the country still retains the ability to adjust crude import volumes according to prevailing prices. — Reuters
Clyde Russell is an Asia commodities and energy columnist at Reuters. The views expressed here are the writer’s own.
