China Taps Crude Stockpile as Refineries Struggle with Higher Oil Prices

China's crude oil stockpile has been tapped for the third month in a row as refineries struggled to meet demand due to higher oil prices caused by supply disruptions from the Middle East. According to official data, China processed about 640,000 barrels per day (bpd) more than what was available from imports and domestic production in August. This is the third time in four months that China has drawn on its massive stockpile, which holds at least 1.2 billion barrels.

The country's crude oil imports dropped to a decade-low in February after the US and Israel attacked Iran, causing higher oil prices. While imports have ticked up slightly since then, refinery runs remain weak, leading to increased reliance on inventories. China tapped its stockpile by about 500,000 bpd in May and 940,000 bpd in June before seeing a surplus of 210,000 bpd in July.

The Strait of Hormuz remains contested between Iran and the US, while advances by Yemen's Houthi group threaten Saudi exports. China has absorbed much of the loss by cutting seaborne oil imports by up to 4 million bpd from pre-war levels. However, it is unclear how long China will continue to keep its imports low.