U.S.-Iran Tensions Risk Hormuz Strait Closure, Chinese Refiners Face 33% Q3 Bitumen Supply Decline

According to Jin10, U.S.-Iran tensions and the risk of Hormuz Strait closure on July 14, 2026 have intensified oil supply concerns for Chinese refiners. State-owned refineries face disruptions to Middle Eastern crude supplies, while regional refineries confront dual risks from Venezuelan crude sanctions and Iranian oil transport disruptions. These uncertainties are restraining refineries from significantly raising production rates.

Refined bitumen supply is projected to decline 33% year-over-year in Q3, yet near-term output from some refineries, particularly in South China, has recently increased and pressures prices. Meanwhile, highway fixed-asset investments fell 9.4% year-to-date through May 2026, with Q3 bitumen demand expected to drop approximately 30% year-over-year, further dampening demand prospects amid frequent typhoons and monsoon rains that have disrupted road construction activities.