July 18, 2026 [ Stonex ]- Asian oil demand is returning to the centre of the crude market as global balances remain tight following the second quarter supply shock.
Brent crude has retreated from the conflict-driven surge above $118 per barrel, but physical supply conditions remain constrained by cautious shipping, inventory draws and limited spare capacity. The direct assessment from Bruno Santos points to a market where headline prices have eased faster than the underlying supply chain has healed, and there is a risk that recovering Asian oil demand could absorb returning barrels before the market rebuilds a comfortable surplus.
Bruno Santos, StoneX Brazil Market Intelligence Analyst, tracks commodity market flows with a focus on Brazil and global energy fundamentals. His perspective connects geopolitical supply disruption with regional demand shifts, making his analysis especially relevant as Asian oil demand begins to recover from the crisis period.
Key Themes from the Discussion
China posted its lowest crude imports in eight years during the disruption at around 8 million barrels per day.
India cut crude imports by about 22% and leaned more heavily on Russian crude during the supply shock.
Recovering Chinese and Indian consumption could absorb additional Gulf barrels and keep crude balances tight.
Asian Oil Demand Rebound Tightens Crude Balances
Asian oil demand weakened sharply during the Middle East disruption, but the recovery path now matters more for crude balances than the initial demand loss. Santos notes that “China for example posted the lowest crude imports in eight years at around 8 million barrels per day”, while India “cut imports by about 22%” and shifted more heavily toward Russian crude. The return of Chinese refinery runs and Indian crude buying could absorb barrels that traders may assume are available to rebuild inventories. Asian oil demand therefore becomes a pressure point for the second half of 2026 because stronger consumption could delay any move from deficit toward surplus.
Chinese Oil Imports Could Absorb Returning Supply
Chinese oil demand is expected to recover as refineries normalise runs and additional crude becomes available to the market. Santos says “we expect a gradual recovery coming from Asia” and adds that Chinese demand is expected to rise in the third quarter and even more in the fourth quarter as state refineries increase activity. This rebound matters because U.S. waivers on Iranian crude could provide extra support, with China described as the main buyer of Iranian barrels. As a result, Chinese oil imports could tighten global crude balances again if recovering demand absorbs supply before inventories are rebuilt.
India Oil Demand Adds Pressure to Supply Recovery
India oil demand remains a critical variable because the country adjusted quickly during the disruption but could re-enter the market as supply routes normalize. Santos explains that India reduced imports during the crisis and relied more heavily on Russian crude, which helped reduce some of the market stress. Despite that adjustment, stronger Indian consumption during the second half of 2026 could combine with China’s recovery to lift Asian oil demand at the same time as spare capacity remains limited. India oil demand adds now another layer of pressure to a crude market that Santos expects to remain in deficit at least through the end of the third quarter.
Frequently Asked Questions
Why did Asian oil demand weaken during the crisis?
Asian oil demand weakened because the Strait of Hormuz disruption reduced available crude flows and pushed China and India to cut or adjust imports. China recorded its lowest crude imports in eight years, while India reduced imports by about 22%.
How could Chinese oil demand affect crude prices?
Chinese oil demand could tighten crude balances if refinery runs recover faster than supply chains rebuild inventories. Santos expects Chinese demand to rise in the third and fourth quarters as more crude reaches the market.
Why does India matter for the oil outlook?
India matters because its import decisions can influence how quickly returning barrels are absorbed. A stronger rebound in Indian consumption could keep the global crude market tighter for longer.
Download the StoneX 2026 Commodities Outlook
Access analysis across the agricultural, energy, metals, and emerging currency markets, alongside critical insights into the factors influencing these markets over the upcoming quarter.
Read the full story on stonex.
