China’s Gulf oil imports doubled in July amid Iran ceasefire

China's crude oil imports from Gulf nations rebounded sharply in July, doubling month on month by volume, as a temporary ceasefire between the United States and Iran reopened shipping lanes through the Strait of Hormuz, according to official Chinese customs data released on Thursday.cnbc

Gulf purchases, dominated by Saudi Arabia and the United Arab Emirates, accounted for 27.6 percent of China's total crude imports in July, rising more than 10 percentage points from the previous month. China's total crude imports climbed 22.1 percent month on month to 35.73 million tonnes, the highest level in three months.scmp+1

A Dramatic Reshuffling of Suppliers

The rebound in Gulf flows came alongside a sharp reshuffling of China's crude supply sources. Imports of Iraqi crude plunged 98 percent in July to roughly 100,000 tonnes, according to the customs data. Meanwhile, purchases from Russia Rosneft Oil Company, China's largest supplier, rose 10 percent from June and 5 percent year on year to 9.15 million tonnes, or about 2.16 million barrels per day.shafaq

Imports from Brazil surged 31.9 percent year on year to 4.98 million tonnes, and volumes from Indonesia climbed 51.8 percent. By contrast, purchases from Malaysia — a major transshipment hub for sanctioned Iranian crude — fell 64.3 percent to 1.51 million tonnes, suggesting tighter enforcement of sanctions or reduced Iranian supply.shafaq

Despite the collapse in Chinese purchases, Iraq's overall crude exports nearly tripled in July to about 1.4 million barrels per day, with prices for its Basrah grades surging sharply on Thursday.shafaq

Outlook Clouded by Rising Prices

Analysts cautioned that the July import surge may be short-lived. "The oil flow was likely due to the temporary ceasefire in June and July, as well as lower oil prices during that period," said Chim Lee, senior analyst at the Economist Intelligence Unit. "Given that traffic in the Strait of Hormuz has declined again and oil prices have gone up, we're sceptical that imports will continue to rise as much as it did on a sequential basis."scmp

Brent crude has climbed steadily, rising roughly 38 percent over the past year. The ceasefire, initially brokered in April, had already begun unraveling by early July when President Donald Trump declared it was over. Iran subsequently re-closed the strait in response to Israeli strikes on Lebanon, sending flows back into decline.tradingeconomics+4

The July rebound followed months of depressed imports. China's crude purchases had fallen to a near-decade low of 29.27 million tonnes in June — the weakest since October 2016 — as the Hormuz conflict choked off Middle Eastern supply.reuters+1