Over the course of 2025, China’s seaborne crude imports have increased by 3% compared to 2024, averaging 10.3 mbd. However, much of this growth is attributed to strategic stockpiling, rather than an increase in underlying refining demand. China’s motor fuel consumption has peaked, and the petrochemical sector’s recovery has been slow, putting a cap on real consumption.
State-Owned Refiners and Stockpiling
State-owned refiners (SOEs) have been a major driver of crude imports, building close to 60mb of crude into storage in Q2 2025. This has pushed above-ground inventories to record highs, with commercial tank utilization at around 62%. However, this stockpiling momentum has stalled since June due to concerns about port congestion if utilization levels were to climb much higher. While China is expanding its storage capacity, with another 100mb expected by 2027, most of this new capacity is not anticipated to come online until late 2026. This limits the potential for further significant SOE-led stockpiling in the near term.
Independent Refiners and Iranian Imports
In Shandong province, home to the independent “teapot” refiners, commercial stocks have continued to rise, absorbing around 40mb of crude since March. This is largely due to a steady influx of sanctioned Iranian barrels, as traders and refiners aim to move these volumes onshore to mitigate the risk of potential Western sanctions. Despite weaker refining runs among these refiners, Iranian imports have averaged over 1.4 mbd this year, a 12% increase year-on-year.
The high level of inventories in Shandong has created a surplus, which has led to widening discounts for Iranian crude. If traders want to increase prices for buyers, they will need to draw down existing stocks, which could slow the pace of future Iranian imports.
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Source: Breakwave Advisors
