National Bank of Canada said China’s sharp pullback in petroleum oil imports between March and June helped contain price gains despite a Middle East supply shock. Imports fell by 5 million barrels per day, or 41.4%, and, alongside the release of strategic reserves, the reduction was described as offsetting the global shortfall and limiting shortages elsewhere.
In July, petroleum product imports rebounded by 1.2 million barrels per day, or 22.1%, a move described as unusually large in percentage terms. The bank said the durability of that recovery remains uncertain, given China could keep drawing on reserves and maintain lower import levels for months. It added that future Chinese demand trends are expected to be as influential for global energy prices as developments in the Middle East, particularly if the Strait stays closed for an extended period.
Impact Of Chinese Demand On Global Oil Prices
We must closely watch China’s fluctuating crude imports as they are currently dictating global oil price directions just as much as Middle East geopolitics. Historically, a massive drop of over 40% in Chinese imports earlier in the year helped cap global oil prices despite severe supply threats. However, recent data from July 2026 shows a sharp 22.1% rebound in their imports, which is already putting upward pressure on Brent crude as it hovers around $80 a barrel.
Trading Strategies Amid Market Volatility
We recommend that derivative traders position for increased volatility by using long call options on Brent and WTI crude. If Middle East shipping lanes face prolonged disruptions while Chinese demand continues this sudden recovery, we could see a rapid breakout in prices. Historical precedent shows that when rising Chinese demand aligns with geopolitical supply constraints, global oil prices can easily surge by 15% within a few weeks.
To navigate this, we suggest trading short-term bull call spreads to capitalize on the immediate upside while limiting premium costs. We should also monitor China’s domestic refinery run rates and strategic inventory drawdowns in the coming weeks. If China continues to rebuild its stockpiles rather than relying on its own reserves, the current resistance levels for oil will quickly turn into new support levels.
