China is set to reemerge as a major force in global oil markets beginning in August after a sharp drop in crude imports earlier this year amid the war in Iran, according to research from JPMorgan cited by CNBC.
The bank's outlook comes after an unusually weak period for Chinese crude imports. JPMorgan estimates that China's oil purchases fell dramatically following supply disruptions linked to the war in Iran, forcing Beijing to draw down inventories and rely more heavily on existing reserves. Imports dropped to about 7.8 million barrels per day in May, their lowest level since late 2017.
Analysts at JPMorgan believe much of that decline was temporary rather than structural. The bank estimates roughly 3 million barrels per day of lost demand will return as China's petrochemical sector increases activity and state authorities begin rebuilding oil stockpiles that were depleted during the supply disruption.
"China is expected to return as a major oil buyer in August," JPMorgan said, arguing that the timing aligns with normal cargo scheduling cycles and seasonal refinery demand ahead of the final quarter of the year.
The expected rebound could have significant implications for global energy markets as China remains the world's largest crude importer, and any substantial increase in purchases would tighten supply balances at a time when oil traders are already closely watching geopolitical risks in the Middle East.
A return to import levels closer to 11 million or 12 million barrels per day could absorb a significant portion of excess crude currently available in Atlantic Basin markets and provide support for Brent crude prices through the second half of 2026, JPMorgan said.
As part of its outlook on China's demand recovery, JPMorgan highlighted several companies it believes are well-positioned to benefit. The bank's top oil-sector pick is PetroChina, citing the company's dominant position in China's energy market, extensive upstream production assets, and large refining operations.
JPMorgan analysts believe PetroChina stands to gain directly from higher domestic crude demand and increased refinery throughput as economic activity improves. They also identified LG Chem as a beneficiary of the anticipated rebound. The bank expects recovering petrochemical demand in China to support feedstock consumption across the region, creating favorable conditions for companies tied to industrial and chemical production.
The banking giant argues that China's underlying energy demand remains intact and that current import levels understate the country's actual consumption needs. According to the bank, China's strategic petroleum reserve system and commercial storage network hold roughly 1.3 billion barrels of capacity.
