China Steps Up to Fill Asia's Oil Demand Gap Amid Middle Eastern Disruption

China has taken on the bulk of Asia's oil demand reduction, offsetting lower supplies from the Middle East due to the conflict with Iran. In July, China's oil imports rose to 8.41 million barrels per day, up from June's nearly decade-low level of 7.12 million barrels per day, but still 24.3% below last year's July levels.

The world's largest oil importer recorded an average of 7.78 million barrels per day over the past two months, which is 4.21 million barrels per day below February's pre-conflict average of 11.99 million barrels per day.

Most Middle Eastern crude oil exports go to Asia, where arrivals have fallen sharply due to the conflict. Total oil imports into Asia stood at 22.82 million barrels per day in July, down from 26.89 million barrels per day before the conflict.

China's substantial crude oil stocks of at least 1.2 billion barrels are likely to sustain lower imports for an extended period, with analysts suggesting that China may be able to balance Asia's oil demand on its own for now.