The oil market story of 2026 remains “extraordinary”, analysis by the S&P Global Energy Crude Oil Markets team, which was sent to Rigzone this week, highlighted.
“The greatest oil supply disruption in history was followed, in quick succession, by the most dramatic price increase and collapse ever recorded in such a short period of time (from $144.42 per barrel on April 7 to $69.35 per barrel on July 3,” the oil markets team stated in the analysis.
“Now, following the breakdown of the U.S.-Iran ceasefire, the shortfall of crude and condensate shipments from the Middle East has once-again widened, nearly back to what it was during the early months of the conflict (and prices back in the $80-$100 per barrel range),” they added.
The oil markets team outlined in the analysis, however, that there has been one constant through it all – “China has emerged as the key oil market swing buyer”.
Since May, China has reduced its seaborne crude oil imports by five million barrels per day, or 45 percent, the oil markets team highlighted in the analysis.
“This has served as a demand-side shock absorber, helping offset lost Persian Gulf barrels and contain prices,” they said.
“By contrast, crude oil imports in the rest of the world are near pre-war levels,” they added.
The oil markets team went on to state that China’s actual oil consumption does not track with the decline in imports.
“S&P Global Energy estimates that Chinese oil demand for the second quarter of 2026 is down 1.6 million barrels per day year over year, far less than the five million barrel per day decline in imports,” they said.
“Sizeable crude inventories – approximately 1.5 billion barrels – have enabled China to sharply cut crude oil purchases and still support consumption through commercial inventory drawdowns,” they added.
“A resumption of Chinese buying at pre-war levels would remove the oil market’s most important demand-side cushion,” they continued.
Jim Burkhard, Vice President and Global Head of Crude Oil Research at S&P Global Energy, said in the analysis that “China has acted as the swing buyer since oil flows in the Strait of Hormuz were disrupted”.
“The reduction of its crude imports was the biggest reason why prices fell so sizably from April to July, and it is why they have not gone even higher since the war heated back up,” he added.
Burkhard warned that “when, and at what pace, China resumes buying is a variable that will shape the trajectory of oil prices”.
“The same factor that capped prices could quickly amplify them,” he said.
Burkhard went on to state in the analysis that every buyer would like to have the flexibility to adjust purchases to market conditions but noted that few can move the market the way China can.
“The market’s balance now depends heavily on a choice that Beijing can change,” he said.
“That is one reality that the Hormuz crisis has revealed,” he added.
China Imports
In a research note sent to Rigzone by the Goldman Sachs team this week, analysts at the company said the physical oil market is tightening, with their global visible stocks counter drawing by 6.3 million barrels per day over the last two weeks.
They outlined that this was likely driven by three “key factors”. These included “lower flows from the Persian Gulf and the Red Sea … lower Russian oil exports, and … stronger Asian imports, including to China”, the note pointed out.
Asia net imports of crude and condensate increased by 5.6 million barrels per day over the last two weeks, according to the note, “with China accounting for 2.3 million barrels per day of the pick-up”.
“Lower crude prices in late June and early July likely encouraged Asia buying, as higher Persian Gulf loadings a month ago translated into high Asian imports now,” they added.
“While China net exports of refined products increased 0.8 million barrels per day year over year, we do not expect a further large increase for three reasons,” they revealed.
“China’s total 2026 products export quota is on track to be roughly in line with last year’s levels,” the analysts said in the note, outlining the first reason.
“The government will likely continue to prioritize domestic energy security, reportedly requiring refiners to keep their inventories above end-February levels,” they added, outlining the second reason.
“Chinese refinery utilization rates edged lower last week,” they concluded, pointing to the third reason.
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