China, the world’s largest importer of liquefied natural gas (LNG) and crude oil, is experiencing a sustained decline in LNG imports for the eighth consecutive month in June 2025. This trend, coupled with shifts in its oil import dynamics, signals significant changes in global energy markets. Below, we explore the latest data on China’s LNG and oil imports, their sources, and the broader implications for markets and investors.
China’s LNG Imports: Eight Months of Decline
China’s LNG imports are projected to drop to approximately 5 million metric tons in June 2025, a 12% year-on-year decline, according to ship-tracking data from Kpler cited by Bloomberg. This marks the eighth straight month of weaker imports compared to the previous year, with 2025 imports expected to fall 6–11% below 2024’s total of 76.65 million metric tons. In the first four months of 2025, LNG imports slumped to 20 million tons, down from 29 million tons in the same period of 2024.
Several factors are driving this decline:
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Milder Winter Weather: Reduced demand for residential heating in northern China has lowered LNG consumption.
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Weak Industrial Demand: Slower growth in the industrial and chemicals sectors has dampened gas usage.
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Increased Pipeline Gas and Domestic Production: Rising pipeline imports from Central Asia and Russia, alongside a 5.6% increase in domestic gas production to 232.4 billion cubic meters (bcm) in 2023, have reduced reliance on LNG.
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Trade Tensions: China halted U.S. LNG imports in March 2025 due to a 125% tariff amid an escalating trade war, redirecting purchases to suppliers like Qatar and Indonesia.
Sources of China’s LNG Imports
In 2023, China’s LNG imports averaged 9.5 billion cubic feet per day (Bcf/d), with key suppliers including:
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Australia: 34% of total LNG imports
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Qatar: 23%
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Russia: 11%
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Malaysia: 10%
Pipeline gas, accounting for 41% of China’s 16.0 Bcf/d natural gas imports in 2023, primarily comes from Turkmenistan, Russia (via the Power of Siberia 1 pipeline), and Myanmar. Russia’s pipeline exports are set to increase, with Power of Siberia 1 targeting 3.7 Bcf/d by 2025 and discussions ongoing for Power of Siberia 2 (4.8 Bcf/d capacity).
China’s Crude Oil Imports
China’s crude oil imports have also faced headwinds. In 2024, a decline in transportation fuel demand (particularly diesel) led to reduced refinery runs and crude imports. The U.S. Energy Information Administration (EIA) reported that net decreases in gasoline, diesel, and jet fuel consumption offset growth in other petroleum products like liquefied petroleum gases (LPG) and naphtha, which are increasingly imported directly for petrochemical manufacturing. A tax change in December 2024, reducing value-added tax rebates on petroleum product exports, has further clouded the outlook for 2025, potentially lowering crude imports.
In 2024, China’s crude oil imports came from:
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Saudi Arabia: The largest supplier, though specific volumes vary.
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Russia: A significant source, with exports becoming harder to track due to “dark pool” shipping practices.
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Iraq: Imports increased in 2024.
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United Arab Emirates and Kuwait: Imports declined.
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Canada: Imports hit an all-time high of over 0.3 million barrels per day (b/d) in September 2024, boosted by the Trans Mountain Expansion project.
The EIA forecasts slower petroleum consumption growth in China for 2025 and 2026, but net imports are expected to rise as domestic production lags behind demand.
Impact on Global LNG Markets
China’s reduced LNG imports have ripple effects across global markets:
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Eased Supply Pressure: Lower Chinese demand has freed up LNG volumes, benefiting other Asian countries (e.g., Japan, India) and Europe, where inventories were depleted after a cold 2024–2025 winter. Europe’s LNG imports surged to 10.8 million tons in March 2025, with 54% from the U.S.
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Price Suppression: Weaker Chinese demand has kept Asian spot LNG prices in check, dropping to $11 per million British thermal units (mmBtu) in May 2025 from a February peak of $16.50/mmBtu. Prices above $10/mmBtu remain uneconomic for Chinese buyers, favoring pipeline gas and domestic production.
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U.S. Exporters’ Challenges: The halt in U.S. LNG exports to China, which accounted for 5% of China’s LNG in 2024, threatens long-term contracts worth 20 million tons per year. Chinese buyers are reselling U.S. cargoes to Europe and seeking new deals with Middle Eastern and Asia-Pacific suppliers, potentially undermining U.S. export growth.
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Oversupply Risks: Slower Chinese demand, combined with new global LNG supply from U.S. and Middle Eastern projects, could lead to oversupply and margin erosion by the late 2020s, particularly if Chinese traders resell contracted LNG abroad.
Impact on Global Oil Markets
China’s oil import trends also influence global dynamics:
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Subdued Demand Growth: Slower petroleum consumption growth in China, driven by declining diesel demand and a shift to petrochemical feedstocks, may cap upward pressure on global oil prices.
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Shifting Trade Flows: Increased imports from Iraq and Canada, alongside reduced reliance on other Middle Eastern suppliers, reflect China’s diversification strategy. Russia’s opaque export practices add uncertainty to supply tracking.
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Refinery Dynamics: Lower refinery runs due to tax changes and weaker transportation fuel demand could reduce China’s crude import growth, potentially softening demand for OPEC+ barrels. However, rising petrochemical demand may offset some losses.
Investor Considerations
Investors navigating these shifts should focus on the following:
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U.S. LNG Export Risks: The loss of China as a growth market could strand U.S. LNG projects, especially those awaiting final investment decisions (FID). Monitor European demand, as its long-term decline (forecast to drop from 507 bcm in 2023 to 281–407 bcm by 2035) limits rerouting potential. Projects with flexible destination clauses and portfolio sales agreements (SPAs) are better positioned.
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Middle Eastern and Russian Opportunities: Suppliers like Qatar, Australia, and Russia are gaining market share in China. Investors in these regions’ LNG projects may see stable returns, particularly with long-term contracts. Russia’s pipeline expansion plans also warrant attention.
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Renewables Competition: China’s rapid growth in renewables (solar and wind costs now undercut natural gas) and coal’s continued dominance (61% of power generation in 2023) threaten LNG’s role. Electric vehicle adoption, with heavy-duty electric truck sales rising from 3,000 in 2020 to 35,000 in 2023, further displaces LNG and diesel demand. Invest in diversified energy portfolios with exposure to utilities or nuclear.
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Oil Market Stability: Monitor China’s petrochemical sector and tax policy impacts on refining. Stable or declining Chinese crude demand could pressure oil prices, favoring investments in non-OPEC+ producers like Canada, where export capacity is expanding.
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Geopolitical Risks: The U.S.-China trade war introduces volatility. Investors should prioritize companies with diversified markets and hedging strategies to mitigate tariff-related disruptions.
Conclusion
China’s eight-month LNG import decline and evolving oil import patterns reflect a complex interplay of domestic policy, trade tensions, and global energy transitions. While these trends ease supply constraints for other regions, they pose challenges for U.S. exporters and signal potential oversupply risks in LNG markets. Investors should prioritize flexibility, diversify across energy types, and closely watch China’s energy policy and geopolitical developments to navigate this shifting landscape.
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