The Daily View: China’s long game and the post-Hormuz oil map

PREDICTIONS for when the Hormuz crisis will end seem to be moving in only one direction: further into the future.

Recent forecasts from the Trump administration’s energy analysts suggest disruptions linked to the Middle East conflict could linger through 2027. Oxford Economics has gone further still, arguing that a durable resolution is unlikely before 2028. Their view is that shipping through the Strait of Hormuz will remain subject to recurring disruption, with traffic volumes fluctuating alongside regional tensions but staying well below pre-conflict norms.

Such forecasts are heavily caveated and no one can predict the course of a war with confidence. But the broader conclusion is difficult to dispute: the crisis is increasingly being treated as a structural feature of global energy markets rather than a temporary shock.

If that proves correct, the most important response may not come from Washington, Tehran or Riyadh. It may come from Beijing.

While concerns about energy security continue to mount elsewhere, China’s reaction has been surprisingly calm. Despite importing roughly 5.5m barrels per day less crude than normal, Beijing has shown little urgency to return to pre-crisis purchasing patterns. The reason is simple. Inventories have bought China time and it seems Beijing’s strategic stockpiling was bigger than most estimates had assumed.

State and commercial stockpiles remain comfortably above early-2025 levels, providing a substantial buffer against supply disruptions. Even sustained drawdowns of 1m barrels per day would leave several months of additional supply available. Rather than scrambling for replacement cargoes, Chinese refiners have been able to wait.

More importantly, when imports do recover they are unlikely to recover equally across all suppliers.

Chinese buyers are increasingly prioritising crude that is readily available, carries lower transport risk and can be delivered at competitive freight costs. That favours sanctioned barrels already positioned in Asia and shorter-haul supply routes over traditional long-haul Middle East imports. Brazil is a current favourite — according to Clarksons’ latest numbers Chinese purchases of Brazilian crude for October have already risen to 775,000 bpd from 600,000 bpd for September.

Iranian crude is expected to rebound as floating inventories accumulated during recent disruptions are discharged. Russian volumes are also set to increase, supported by renewed Far East purchases and the reopening of the northern sea route. At the same time, elevated freight rates, higher insurance costs and restrictions on Chinese-flagged vessels entering high-risk areas continue to undermine the attractiveness of Saudi and Iraqi cargoes.

The result is a quiet but significant shift in global trade flows. China’s demand recovery is increasingly being met by inventories and sanctioned supply rather than a return to conventional Middle East sourcing.

For tanker markets, the implications are profound. Weaker oil demand growth may be negative in isolation, but prolonged disruption is creating longer voyage distances, greater volatility and growing incentives to build strategic inventories. As the centre of gravity for refining, petrochemicals and energy demand moves east, shipping patterns are likely to become increasingly Asia-centric.

The Hormuz crisis is no longer simply a question of when traffic returns to normal. The more important question may be whether “normal” still exists.

Richard Meade
Editor-in-chief, Lloyd’s List