China’s crude import stress resistance in a Hormuz crisis

As the Gulf conflict escalates and the near-full closure of the Strait of Hormuz enters its second week, the likelihood of broader production disruptions in the Gulf and refinery run cuts across Asia is increasing.

In China, the world’s largest crude importer and potentially one of the most exposed economies in the event of a prolonged Middle East supply disruption, some refiners have already brought forward previously scheduled maintenance in anticipation of possible feedstock shortages.

While the country benefits from a diverse supplier base and sizable crude inventories, uneven stock distribution and varying dependence on Middle Eastern supplies leave some refineries facing more immediate run-cut risks. This report assesses these vulnerabilities at the refinery level.

In 2025, crude supplied via the Strait of Hormuz accounted for roughly 35% of China’s total crude supplies, including both seaborne and non-seaborne sources.

China’s seaborne crude imports averaged about 11.5mbd in the first two months of the year, around 900kbd higher than the 2025 average. The increase was mainly driven by pre-holiday refinery run hikes, alongside roughly 200kbd of inventory builds.

At the same time, the share of seaborne imports transiting Hormuz declined from 51% in 2025 to about 44%. This reflects a sharp increase in Russian seaborne crude imports, which do not pass through the Strait, rising from around 1.2mbd in 2025 to roughly 1.8mbd. Private Chinese refiners stepped up purchases as weaker demand from other Asian buyers created opportunities, reducing reliance on Hormuz-linked Iranian supplies.

Beyond seaborne flows, China’s domestic crude production and Russia–China pipeline imports together averaged around 5.1mbd in 2025 and are expected to remain broadly stable this year. As a result, crude flows linked to the Strait of Hormuz still account for roughly one third of China’s total crude supply.

Chinese refineries typically maintain around three weeks of feedstock inventories on site, while additional commercial storage near major refining hubs provides a critical buffer against temporary supply disruptions.

State-run refiners—required by China’s authorities to prioritise domestic fuel supply—would likely respond to a prolonged disruption by cutting product exports and reducing refinery run rates, rather than immediately drawing on Strategic Petroleum Reserve (SPR) stocks, which require state approval for access. The response would likely begin with suspending new export contracts, potentially followed by delaying previously contracted cargoes.

China currently holds an estimated 1.3 billion barrels of crude in onshore storage, equivalent to around four months of seaborne imports at the 2025 average rate. Roughly 900mb are held in state-controlled facilities, including over 110mb in underground strategic storage, while about 400mb are stored in private commercial tanks.

Despite the large aggregate inventory cushion, exposure varies significantly at the refinery level. Refineries that rely almost entirely on seaborne imports and operate with limited storage capacity could face near-term run cuts if disruptions persist.

The two largest Chinese oil majors—PetroChina and Sinopec—also display markedly different levels of resilience.

PetroChina controls nearly 80% of China’s domestic crude production, which averaged around 4.3mbd in 2025, and is the primary recipient of roughly 800kbd of Russian pipeline crude, leaving its seaborne exposure limited to below 1mbd.

The group’s operational crude stocks —defined as crude held in refinery tanks and nearby commercial storage facilities—stood at roughly 177mb as of March 8, providing around 46 days of processing cover at a 3.8mbd run rate, or about 220 days relative to its 800kbd seaborne import exposure based on 2025 levels.  

As such, the group is unlikely to request access to strategic reserves, which would otherwise provide an additional ~90 days of cover against seaborne imports.

By comparison, Sinopec relies on nearly 4mbd of seaborne imported crude. Its operational coverage stood at just over two months, suggesting a greater likelihood that the group could seek access to SPR, which potentially adding another two months of coverage, if supply disruptions persist.

Even within PetroChina’s system, storage distribution and import dependence remain highly uneven. Northern refineries benefit from domestic crude supply and Russian pipeline inflows, whereas southern plants are significantly more exposed to seaborne disruptions.

In particular, PetroChina Yunnan Refinery, which receives imported crude via the China–Myanmar Oil Pipeline, held just over one month of operational stock cover, implying a much higher near-term risk of run cuts compared with other PetroChina refineries.

The group may offset potential output losses by raising runs at nearby plants where feedstock availability is less constrained.

Run-cut risk also hinges on refiners’ ability to substitute alternative crude grades. Facilities operating with a narrow crude slate or constrained by term contract obligations are particularly vulnerable under such a scenario.

For example, Zhejiang Petrochemical (ZPC), the largest single-site integrated refining and petrochemical complex in China, is bound by a long-term strategic supply agreement with Saudi Aramco. Under the agreement, Saudi Arabia supplies around 480kbd of Arabian crude, accounting for roughly 60% of ZPC’s crude requirements, with another ~20% sourced from suppliers whose cargoes transit the Strait of Hormuz.

ZPC has reportedly brought forward full maintenance on one of its four CDUs—work that had originally been scheduled for Q2. The refiner’s rigid term supply structure limits its ability to source alternative barrels, making it more exposed to disruptions affecting Hormuz-linked flows.

Shandong teapot refiners, which have relied heavily on discounted sanctioned crude in recent years to maximise refining margins, appear well supplied in the near term. However, they could face greater supply uncertainty beyond April, even if transit through the Strait of Hormuz resumes.

Shandong’s overall crude inventories—held in refinery tanks as well as private commercial storage—have been rising since November. The build coincided with stronger inflows of Russian barrels following US sanctions on key Russian producers, and stocks increased further in February as Iranian crude imports surged to around 1.6mbd, close to record levels.  

Near-term supply for teapots remains ample. Their operational onshore inventories—including unsold barrels held in bonded storage—stood at around 206mb as of March 8, up 2mb week on week. This equates to more than 10 weeks of cover at an average crude throughput of 2.8mbd.

Additional supply coverage is also evident offshore. Iran’s crude exports surged to a post-sanctions record of nearly 2.2mbd in February, pushing Iranian crude on water to more than 160mb as of February 28. According to Vortexa estimates, most of these barrels had already cleared the Strait of Hormuz before the transit stalled, suggesting that a large share will ultimately reach China even if discharge schedules slow in the coming weeks due to increasingly complex payment channels.

That said, no Iranian cargoes reportedly exited the Strait of Hormuz during the first week of March, with 23 vessels (6.3M DWT) still stranded within the Gulf, according to Vortexa assessment [Iran Crude Situation Report]. While the transit gap will not immediately translate into a halt in Chinese imports—given the lag between export and import flows—the disruption could still tighten market sentiment.

In particular, supply uncertainty could narrow the discounts on Shandong-delivered sanctioned crude, potentially reducing purchase incentives for teapot refiners in the short term.

Meanwhile, India’s rising purchases of Russian crude may affect pricing dynamics more than volumes in the near term. The 30-day waiver granted by the United States appears primarily intended to clear stranded western Russian cargoes, which are less attractive to Chinese refiners than Russia’s Far East grades.

As a result, Shandong’s Russian crude imports are likely to remain elevated in March before falling to around 1mbd in April, down from more than 1.6 mbd in the previous two months, but still well above the 700–900 kbd range seen in 2025.

Looking ahead, the feasibility of Russian crude purchases by teapot refiners beyond April will depend on several factors, including how long the disruption at the Strait of Hormuz persists, whether Indian refiners continue purchasing Russian crude after the waiver expires, and whether Chinese state-owned companies decide to re-enter the seaborne Russian crude market.

China’s overall crude supply system demonstrates significant resilience to a temporary disruption at the Strait of Hormuz, supported by diversified suppliers, substantial onshore inventories, and stable pipeline inflows from Russia and domestic production.

However, vulnerability varies widely across the refining sector. Storage distribution, crude sourcing flexibility, and contractual supply structures will be key determinants of operational resilience. Facilities heavily reliant on Hormuz-linked supply chains or operating with limited crude substitution options could be forced to accelerate maintenance schedules or reduce processing rates.

Private refiners in Shandong appear well buffered in the near term due to strong inventories and large volumes of sanctioned crude on water. Nevertheless, pricing dynamics and sanctions-related trade flows could tighten supply conditions beyond April, particularly if Russian cargoes are redirected to other buyers or if Iranian exports face prolonged transit disruptions.

Overall, while China is unlikely to face an immediate nationwide refining disruption, a prolonged closure of the Strait of Hormuz would likely result in selective refinery run cuts, shifting crude trade flows, and tighter regional product balances across Asia.