Chinese data on oil markets lacks transparency
Markets are unsure how to react on Beijing´s latest announcements.
Andrew Friedman (AF)October 5, 2026
For the first time in eight years, China recorded a year-over-year decline in crude oil imports in the first half of the year, sparking fears in the market that the world's largest oil importer's purchases in the coming months may not be conducive to oil. At the same time, Chinese fuel exports rose in the last half of the year due to record refinery utilization amid an oversupply of refined oil products. In recent months, Chinese refineries have processed more crude oil than the apparent availability, which is the sum of imports and domestic production, according to estimates by Reuters columnist Clyde Russell based on Chinese data. At first glance, based on a simplified estimate of crude oil availability / product exports, it appears that China is consuming less crude oil domestically than before, according to Russell. Analysts keeping a close eye on imports and estimated consumption trends in the world's largest crude oil importer are looking for clues about Chinese demand and purchases that could at times be the single biggest driver of oil prices. Since China does not report commercial or strategic oil reserves, the analyst's job is complicated and involves many "what if" assumptions. Despite the uncertainty about how much crude oil China is really consuming these days, one thing is clear: the latest customs data from China is giving the market some mixed signals, possibly leaning on the bearish side. But there are two main reasons China's crude oil imports fell for the first time since 2013 in the first half of the year. These are the significantly higher crude oil prices this year compared to the lows in the 2nd quarter of 2020, and crackdown on the illegal fuel trade and tax avoidance and tax evasion by private refineries, commonly known as "teapots". China's crude oil imports fell to around 9.77 million barrels per day (bpd) in June 2021, a 2 percent decline from May and the lowest monthly figure since the start of the year, according to tariff data cited by Reuters. In the first half of the year, according to Reuters estimates, China imported 260.66 million tons of crude oil, or 10.51 million bpd. That was a decrease of 3 percent compared to the first half of 2020. The first half of the year was boosted by increased imports from independent refiners. However, since the first quarter, Beijing has started to crack down as fuel production from both independent refiners and state majors grew faster than demand, undermining refining margins and causing a glut. In addition, China has tightened oversight of the refining industry to tackle the illegal fuel trade, close loopholes some companies used to avoid paying taxes on fuel consumption, and curb fuel oversupply, partly due to tax avoidance or tax avoidance Tax evasion is due. At the same time, Chinese refineries processed a record amount of crude oil in June, 14.8 million bpd, up 3.9 percent from May, when throughput rates also broke records, statistical data showed. Average daily processing rates for the first half of the year were even higher, at 15.13 million barrels - a 10.7 percent year-over-year increase, the data also showed.
