Beijing’s release of the first batch of 2026 import quotas has prompted Chinese independent refiners, including both larger and smaller “teapot” refineries, to re-emerge as active buyers in the oil market, injecting fresh momentum into crude demand as yearend approaches. According to various sources, the newly issued quotas total roughly 7.5–8 million tons, notably higher than the 6.04 million tons granted one year ago. Hengli Petrochemicals received 2 million tons, Zhejiang Petroleum 0.75 million tons, while an additional 0.75 million tons is expected to be allocated to Dongming Petrochemical. The larger volume of import rights compared with the same period last year likely reflects the rapid depletion of 2025 import permits by the refineries, which had recently constrained their purchasing capacity.
The quotas are expected to spur prompt crude purchases, given also their timeline of utilization, by the end of 2025. Independent refiners, generally highly price-sensitive, are active buyers of discounted barrels from Iran, Venezuela, and Russia. Once quotas are allocated, these refiners typically enter the market quickly, making opportunistic purchases that create short-term demand spikes. Combined with OPEC+’s recent decision to maintain output levels through the first quarter of 2026, these developments help ease concerns over a potential supply overhang in the coming year.
From a shipping perspective, the sourcing of these crude volumes is critical. Given the prompt nature of independent refinery demand, much of the incremental buying is expected to be met by onshore bonded storage, where imported crude that is not yet customs-cleared is held, and by the floating storage accumulated in recent months in Southeast Asian waters. Consequently, the impact on crude carriers’ ton-miles is expected to be limited. However, the gradual release of tankers currently serving as floating storage back into the trading fleet will add marginal supply to an already tight crude carrier market marked by high utilization of fleet.
Beyond the quota-driven demand, China’s broader crude import activity has strengthened in the final quarter of the year. Its ongoing shift in supply sources, shaped by continuing US-China trade tensions and stricter enforcement of sanctions on Russian barrels, has reinforced ties with alternative and more distant suppliers, reshaping global crude flows. In November, China imported 345.2 million barrels, an 11.5% year-on-year increase, according to LSEG data. While the Middle East remains the dominant supplying region, accounting for around 40% of total imports (139.9 million barrels), long-haul shipments have risen noticeably. Brazilian imports climbed 65% year-on-year to more than 32.9 million barrels, Angola increased 20% to 22.5 million barrels, flows from Canada rose 2.4-fold to 10.5 million barrels, and Colombia supplied 8.2 million barrels compared with zero year on year. By contrast, November shipments from the United States fell 70% year-on-year to 2.1 million barrels, while Russian imports declined 34% to 22.5 million barrels, reflecting the evolving trade landscape. These shifting patterns are supporting ton-mile demand, particularly for VLCCs, which are heavily employed on longhaul routes.
In conclusion, China’s renewed quota allocations and strengthening crude intake, are poised to have a stabilizing effect for the oil market, while OPEC+’s decision to hold output steady in Q1 2026 signals the group’s shift to constrain oil supply growth in favour of a more balanced supply backdrop. For crude carriers, the cargoes generated by the firming of demand together with China’s efforts to diversify its supply sources are benefiting the market in term of ton miles, while the potential unlocking of tonnage operating as floating storage, is expected to provide some relief to the highly utilized tonnage. Finally, looking beyond the demand dynamics, a key factor for tanker owners to monitor in 2026 will be the VLCC fleet’s replacement pace, given its age, which remains closely linked to earnings as the robust freight environment sustains a relatively high orderbook-to-fleet ratio and continues simultaneously to delay recycling decisions.
Data Source: Intermodal