The narrative that China’s oil demand is stagnating has gained momentum, but the physical market tells a different story. Recent indicators suggest that conclusions about China’s slowdown are being drawn too early.
Start with stockpiling. Through most of 2025, China added meaningful volumes to crude inventories, particularly in Shandong, where teapot refiners run significant amounts of Russian and Venezuelan crude. December showed a brief dip in both floating and onshore storage, but this looked more like a “small blip” than a structural shift. With Brent prices low and no shortage of capital, the economics for continued buying remain conducive. And because mainstream Chinese storage has barely built, the country still has spare capacity to continue stock building without constructing new tanks.
Refinery activity reinforces the point. Runs in 2025 were about 1mbpd higher than in 2024, an increase too large to dismiss as data noise. Even if domestic consumption is moderating, export oriented manufacturing and petrochemical production remain strong, and both are energy and transport fuel intensive. The idea that China’s oil demand has already plateaued risks overlooking these physical market dynamics.
Geopolitics add another layer. Even if a Russia–Ukraine peace deal materialises, a rapid return of Russian barrels to Europe is unlikely. Long haul flows into Asia are therefore likely to persist, keeping voyage lengths elevated. Red Sea disruptions and uncertainty around Iran further reinforce this pattern, supporting bunker demand and shipping tonne miles.
Low oil prices amplify these effects. Cheaper crude encourages higher refinery utilisation, stock building, and product exports, a near term demand multiplier that can offset demographic drag.