Key facts
- China's oil imports are aggressively rising, pushing Shanghai crude prices above $100 a barrel.
- Brent crude prices rose above $97 a barrel on Monday and threatened to surpass $100.
- The renewed Chinese buying marks a major shift from a period when subdued Chinese buying helped restrain crude oil prices.
- Smaller Chinese refineries are being squeezed as they can no longer rely on discounted Iranian barrels.
- Improved processing margins, fuel export resumption, and commercial restocking are encouraging Chinese refiners to ramp up purchases.
- Goldman Sachs warns Brent could rally to $120 a barrel if Middle East shipping disruptions intensify.
Oil prices are surging as China's demand for crude rebounds, pushing Shanghai crude prices above $100 a barrel and threatening to lift Brent crude past the same mark for the first time since May. This renewed buying marks a significant shift from a period of subdued Chinese demand that had helped restrain global crude prices.
The period of weak Chinese demand, which saw imports crater for much of 2026, helped stabilize global prices during the Iran war's "actively kinetic" phase. However, a dramatic jump in Shanghai crude prices, now trading at a premium to Brent, indicates that this period is over.
China is now aggressively seeking alternative supplies as disruptions in the Hormuz chokepoint and limited Iranian supplies intensify competition. This scramble is squeezing smaller Chinese refineries that previously relied on discounted Iranian barrels and had shut down due to insufficient domestic demand. Traders report that Congo's Djeno crude was offered to Chinese buyers at premiums as high as $20 a barrel over ICE Brent this week, up from around $15 a couple of weeks ago. Chinese buyers are also purchasing crude from Canada, Brazil, and Argentina, and demand has lifted prices for Russia's ESPO crude.
While Chinese seaborne crude imports are still below prewar levels, trending toward 10 million barrels per day, the Shanghai crude spread indicates that imports are aggressively rising. According to GL Consulting founder Liao Na, the rebound in crude imports is driven by refiners taking advantage of decent margins, coupled with active restocking by commercial players, though she notes this may not signal stronger underlying demand.
Goldman Sachs energy expert Daan Struyven anticipates that China's ability to adjust purchases based on prices will help moderate crude price spikes. However, he warned that Brent could rally to as much as $120 a barrel if attacks on shipping in the Middle East escalate.