Goldman Sachs projects that China's crude oil import demand will continue to be subdued in the fourth quarter of 2026. The firm notes a "staggering" 50% year-over-year drop in China's crude import demand, equivalent to 5 million barrels per day. While Goldman expects about 90% of this demand weakness to unwind in the coming quarters, the remaining 10% is believed to be permanent. This structural reduction is attributed to China's strategic move to diversify energy sources and build up stockpiles, particularly in response to the "Hormuz shock."
According to Goldman Sachs, even if the Strait of Hormuz fully reopens, China may structurally reduce its dependence on imported crude. The market had perhaps excessively priced in a recovery in supply and extrapolated to a surplus in 2027, but the environment remains highly uncertain, with unresolved issues like Iran sanctions and Strait management. JPMorgan's Natasha Kaneva added that barrels exiting Hormuz are increasingly destined for China, but China is not buying at previous levels.
The subdued import forecast has implications for major oil companies like Exxon Mobil and Chevron. Goldman Sachs warns of structural earnings headwinds for these companies, with their forward P/E ratios (12 for both XOM and CVX) signaling analyst expectations of earnings compression. This perspective also impacts integrated peers such as BP and Shell, which face similar demand challenges in their financial outlooks.
