China-Middle East Oil Trade: $280B Annual Flows Reshaping Global Energy Markets

Volume and value of China-ME oil trade#

China imported approximately 11.5 million barrels per day of crude oil in 2025, with Middle Eastern producers supplying roughly 48% of total volume valued at over $280 billion annually. Saudi Arabia remains China largest single supplier at approximately 1.9 million barrels per day, followed by Iraq at 1.3 million and the UAE at 900,000 barrels per day. These volumes have grown steadily as Chinese refining capacity has expanded and domestic production has stagnated. The trade relationship creates profound mutual dependency between Middle Eastern producers and Chinese industrial demand.

RMB settlement and de-dollarisation trends#

An estimated 15-20% of Chinese crude oil imports from the Middle East were settled in RMB during 2025, a significant increase from under 5% in 2022. The Shanghai International Energy Exchange yuan-denominated crude futures contract has gained traction as a pricing reference for Chinese-destined cargoes. Saudi Aramco has publicly confirmed willingness to accept RMB payments, though the dollar remains dominant. The gradual shift toward RMB settlement reflects both Chinese policy objectives and Middle Eastern producers interest in diversifying currency exposure.

Infrastructure integration and downstream investments#

Chinese companies have invested heavily in downstream refining and petrochemical capacity in the Middle East, with joint ventures in Saudi Arabia, Kuwait, and Oman. Saudi Aramco investments in Chinese refineries create reciprocal ties that deepen the bilateral energy relationship beyond simple commodity trade. The integration extends to logistics infrastructure, with Chinese port operators managing terminals in Oman, the UAE, and Saudi Arabia. These investments create structural interdependencies that would be extremely costly to unwind.

Energy transition implications#

China rapid adoption of electric vehicles and dominant position in renewable energy manufacturing are projected to slow crude oil demand growth within the next decade. However, petrochemical demand continues to grow as the economy shifts from fuel consumption to chemical feedstock applications. Middle Eastern producers are adapting by investing in petrochemical complexes that serve Chinese industrial demand. The energy transition creates uncertainty about the long-term trajectory, making diversification strategies critical for both sides.

Strategic petroleum reserve dynamics#

China has been steadily building its strategic petroleum reserve, with an estimated 950 million barrels in storage by end of 2025. Large purchases for reserve filling create periodic demand spikes that influence global crude oil prices. The reserve provides roughly 80 days of import cover, though the target is believed to be 120 days, suggesting continued large purchases in coming years.