Hormuz crisis, high oil prices accelerate China’s shift away from crude

CHINA’S oil demand is falling sharply as high crude prices and prolonged disruptions around the Strait of Hormuz accelerate the country’s shift towards electric vehicles, alternative-fuel trucks and electrified industrial equipment.

China’s oil consumption declined 9 percent year-on-year in the second quarter (Q2) of 2026, according to an analysis by the Centre for Research on Energy and Clean Air (CREA). The drop contributed to a 1 percent reduction in the country’s carbon dioxide emissions during the quarter, marking the first quarterly emissions decline driven primarily by weaker oil consumption.

The development comes as renewed hostilities in the Middle East continue to disrupt oil shipments through the Strait of Hormuz, pushing crude prices above $90 per barrel and raising concerns about prolonged supply and transportation risks. Brent sold at $96.28 per barrel on Saturday at 2.30pm, while WTI stood at $91.48.

One of the world’s largest tanker operators, Mitsui OSK Lines (MOL), now expects the disruption to persist beyond the end of 2026.

“Given the current situation, it’s difficult to see operations resuming in any form by the end of the year,” MOL Chief Executive, Jotaro Tamura, told Bloomberg.

The company had previously assumed that navigation through Hormuz would gradually resume in October 2026 and return to normal by January 2027. However, the latest escalation in hostilities has forced the tanker operator to reassess that outlook.

Tamura said MOL would not currently return to transporting oil through the Strait because the risks remain above acceptable levels. He said sustained de-escalation and evidence of safe passage would be required before the company considers resuming operations.

Traffic through the strategic waterway has also fallen sharply since the latest escalation, with only a handful of observable vessels transiting the strait each day, raising concerns about the reliability of Middle Eastern oil supplies.

China cuts exposure to oil

For China, the disruption and resulting price pressures are reinforcing an energy transition that was already reducing petroleum demand.

Electric vehicles displaced an estimated 36 million metric tonnes of oil during the first half (H1) of 2026, accounting for about one-thirdsof the reduction in Chinese oil demand. EVs displaced 19 million tonnes in Q2 alone, 50 percent more than a year earlier, CREA said.

The fastest shift is occurring in the trucking sector. Alternative-fuel use among Chinese trucks surged 90 percent year-on-year between January and June, cutting diesel consumption in one of the country’s biggest transport fuel markets.

Oil demand is also declining in construction and mining as electric machinery replaces diesel-powered equipment. Meanwhile, weaker growth in the chemicals sector is reducing another major source of petroleum demand.

CREA estimates that lower oil consumption prevented about 35 million tonnes of carbon dioxide emissions in Q2, equivalent to roughly 1.3 percent of China’s total emissions during the period, after accounting for electricity used to charge electric vehicles.

The shift is particularly significant for global oil markets because China remains the world’s largest crude oil importer. A sustained decline in its petroleum consumption could weaken one of the biggest sources of global oil demand growth.

CREA expects Chinese emissions could decline for the full year if oil consumption continues to weaken, property sector activity remains subdued and coal-to-chemicals production stays near capacity.

Hormuz disruption adds to demand concerns

The prolonged uncertainty around Hormuz could further reshape global oil trade as major importers seek alternatives and reduce their exposure to Middle Eastern supply disruptions.

Japan, which is heavily dependent on energy imports, is already preparing an oil-import diversification strategy that could include support for Middle Eastern pipelines designed to redirect crude exports away from the Strait of Hormuz.

The combination of higher oil prices, prolonged shipping risks and rapid electrification in China therefore presents a growing challenge for oil producers.

While disruptions around Hormuz can tighten near-term supply and push prices higher, they may also accelerate the longer-term destruction of oil demand, particularly in transportation.

For producers, China’s 9 percent quarterly decline is therefore an increasingly important warning sign. Hence, it spotlights that expensive and difficult-to-transport crude could be accelerating the very transition that threatens future oil demand.