A moderate, temporary rise in oil prices has limited impact on China, StanChart says

A moderate and temporary rise in oil prices driven by Middle East tensions would have a limited impact on China’s economy and policy, Standard Chartered Global Research said.

China is a net oil importer, with the Middle East accounting for 42 percent of the country’s total oil imports in 2025, it said in a report.

However, China’s oil intensity – measured as oil consumption per unit of gross domestic product– has declined steadily over the past decade, underpinned by rapid progress in new energy deployment, electrification, and efficiency gains, the report said.

The researchers estimate that a 10 percent increase in oil prices would push up China’s producer price index by 1 percentage point in three months, while the impact on the consumer price index is negligible.

Against the backdrop of persistent deflationary pressure, an oil‑related uplift to inflation may only generate limited second-round inflation effects and is unlikely to alter monetary policy considerations for now, they said. 

However, a faster and longer-than-expected oil price surge, were the regional conflict to further widen, may weigh on already-weak industry profits and eventually GDP growth, the report said.