China’s Crude Oil Imports Decline Amid Sanctions and Port Restrictions

Key Highlights

• Crude Oil Imports Decline: China’s crude imports fell to 10.38 million bpd, down 5% from last year due to sanctions and port restrictions.
• Freight Costs Surge: U.S. sanctions on Russian and Iranian crude increased shipping costs, reducing the availability of tankers.
• Drop in Product Exports: China’s refined oil exports dropped 18%, and LNG imports declined 7.7%, reflecting supply chain disruptions.
• Expected Market Recovery: Imports may rebound in March-April as non-sanctioned tankers step in and refiners adjust sourcing strategies.

Petroleum Market Pricing

• Refinery Bitumen (VG30) is priced at ₹47,352 per metric ton in Panipat, while Roadgrip Bitumen Emulsion (RS 1) stands at ₹33,810 per metric ton in Mathura. 
• In Delhi, Base Oil (N150) is available at ₹67.5 per liter, and Lubriedge Rubber Process Oil (Paraffinic 245) is priced at ₹72 per liter. 
• Fuel Oil (Virgin 180cST Furnace Oil) in Mundra costs ₹48.5 per kg. 
• In Bhiwadi, Hydraulic Oil (68) is ₹87 per liter, Gear Oil (150) is ₹115 per liter, and Rust Preventive Oil (Water Displacing Type) is the highest-priced at ₹122 per liter.

Crude Oil Supply and Demand Dynamics

• China’s crude oil imports fell by 5% in the first two months of 2025 compared to the previous year, averaging 10.38 million barrels per day (bpd), down from 10.74 million bpd in the same period last year. 
• This decline was primarily driven by tougher U.S. sanctions on vessels carrying Russian and Iranian crude, which limited shipping availability and raised freight costs. 
• Additionally, an unexpected port ban by Shandong Port Group on sanctioned tankers further restricted inflows into China, particularly affecting independent refiners in the region who are major buyers of Russian and Iranian oil.
• The reduction in sanctioned crude arrivals led to a supply crunch and increased costs for smaller refiners, many of whom were already struggling with thin or negative margins. 
• Despite some newer terminals outside Shandong accepting sanctioned cargoes, their handling capacity was too limited to offset the import decline. Meanwhile, refined oil product exports also saw a sharp 18% decline, totaling 7.21 million tons, as domestic consumption remained a priority. 
• In the natural gas market, imports—including piped gas and LNG—dropped 7.7% year-on-year to 20.31 million tons, reflecting weaker winter demand and logistical challenges.

Geopolitical Developments Impacting Trade

• Higher freight charges, stemming from U.S. sanctions, significantly impacted China’s oil import logistics. The removal of sanctioned tankers from major shipping routes increased costs, leading to constrained crude inflows. 
• Although a few alternative terminals attempted to accommodate sanctioned shipments, the overall volume processed remained marginal.
• Additionally, LNG imports into China dropped from 13.2 million tons a year earlier to 10.85 million tons, according to LSEG data, aligning with the broader trend of reduced energy inflows. 
• Mexico is looking for oil buyers in Asia, including China, and Europe to ensure its exports remain unaffected by potential trade restrictions. A Mexican government source stated that there is strong demand for Mexican crude in Europe, India, and Asia.
• Crude oil prices tested the resistance level of $67.05 and remained below it, maintaining a bearish trend. Analysts anticipate further downward movement in crude prices.
• Qatar Energy has set the official selling price (OSP) for its April marine crude at Oman/Dubai plus $2.10 per barrel, according to the latest pricing document.

Market Outlook and Future Expectations

• China’s crude oil imports are expected to rebound in March and April, as higher freight rates attract more non-sanctioned tankers and refiners shift towards alternative crude grades. 
• While the impact of U.S. sanctions and port restrictions persists, Chinese buyers are actively seeking workarounds to ensure supply stability. The long-term outlook hinges on shipping availability, geopolitical developments, and evolving refinery demand dynamics in the coming months.