A rebound in Chinese oil buying is driving up prices of African, Canadian, and Latin American crudes as Strait of Hormuz disruptions force refiners to seek alternatives. Persian Gulf supplies remain constrained while Iranian exports have nearly dried up due to US sanctions. 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 weeks ago, pricing out smaller private refiners known as teapots. Chinese refiners have also snapped up oil from Canada, Brazil, Argentina, and Russia's ESPO crude. Middle Eastern grades have surged as US-Iran tensions dampen Hormuz flow outlook.

Chinese buying is heading toward 10 million barrels a day, up from early-war lows but still below the 12 million pre-conflict level. The increase reflects improving refinery margins, fuel export resumption, and commercial restocking rather than stronger underlying demand, according to Liao Na, founder of GL Consulting. Smaller teapots struggle without access to discounted Iranian and Venezuelan oil, while state-owned giants like Sinopec outbid them. China holds at least 1 billion barrels in storage, providing flexibility.

Longer-term demand faces structural ceilings. Sinopec's chairman said China's oil demand likely peaked in 2025, with EV adoption displacing 1.5 million barrels a day in Q2 per the IEA. Goldman Sachs estimates crude imports fell roughly 35% year-over-year. Daan Struyven, head of oil research at Goldman Sachs Group Inc., said China will act as a stabilizing force moderating price spikes.