The near-term outlook for oil markets is somewhat bearish, despite resilient import volumes from China. Crude imports are averaging 11.25 million b/d, virtually unchanged from 2024 and only marginally higher than 2023 levels. Much of that is being diverted into storage, a strategy that cannot continue indefinitely as tank capacity nears its upper limit. Furthermore, China’s refining throughput rates, hovering around 77–78%, signal that system utilization is steady but stagnant, with no significant expansion.
China economic fragility persists
While China’s upcoming 15th Five-Year Plan (2026–2030) may bring modest policy support, aggressive stimulus is unlikely. We expect GDP growth to stabilize around 4.5–4.6%, suggesting a plateau rather than a rebound in energy demand. On the geopolitical front, I see the tightening of U.S. sanctions on Russian oil firms having a greater impact on India than China. Independent Chinese refiners continue absorbing discounted Russian and Iranian barrels, even as poor margins and reduced export rebates squeeze profitability.
Limited growth in non-OPEC supply
We see U.S. production plateauing, with incremental supply growth shifting to Brazil and Guyana. Global spare capacity remains thin, making the system increasingly fragile. Any major disruption could quickly tighten balances in a market already stretched for flexibility.