China Leads Asia's Oil Demand Amid Ongoing Iran Conflict

China's crude oil imports have taken a significant hit due to the ongoing Iran conflict. According to data compiled by Kpler, Asia's total oil imports in July were 22.82 million barrels per day (bpd), down about 4 million bpd from the average of 26.89 million bpd in the three months prior to the start of the conflict.

The loss of imports by Asia is approximately equal to the drop in imports by China for the past two months, with China's arrivals of 8.41 million barrels per day (bpd) in July being up from near decade low of 7.12 million in June but still 24.3% below July last year.

China has managed to balance Asia's crude oil demand by itself, compensating for reduced shipments from the Middle East. The country's imports are likely to stage a mild recovery in August as cargoes that managed to exit the Strait of Hormuz during the brief ceasefire between the United States and Iran are delivered.

However, September imports are expected to be more revealing, as flows from the Middle East become more constrained given the return to sharply lower shipments through the Strait of Hormuz after the breakdown of the ceasefire deal between U.S. President Donald Trump and Tehran.