China has been amassing crude in strategic and commercial reserves for nearly a year\u2014propping up oil prices throughout 2025 even though its demand growth has weakened.<\/p>\n
As we rolled into the very tumultuous 2026 with two major geopolitical events upending oil markets in as many months \u2013 the U.S. blitz to capture Venezuela\u2019s Nicolas Maduro and the U.S.-Israel strikes on Iran \u2013 China\u2019s oil hoarding will likely pay off in these early days of the unpredictable and already highly disruptive war in the Middle East.<\/p>\n
The Chinese strategy to build up reserves during a nearly year-long buying spree at relatively low prices is now paying off, as the world\u2019s top crude importer has some buffer to power through the early days of the severely disrupted oil flows out of the Middle East, analysts say.<\/p>\n
China\u2019s energy security strategy and plan to aggressively buy cheaper crude, including sanctioned barrels, is insulating the world\u2019s second-largest economy, to some extent, from short-lived supply disruptions as the war in Iran and Tehran\u2019s retaliatory strikes on Gulf neighbors escalate.<\/p>\n
China could soak up, in the near term, Iranian and Russian crude that\u2019s been sitting in floating storage for weeks.<\/p>\n
China\u2019s Crude Hoarding<\/strong><\/p>\n Beijing is estimated to have been\u00a0amassing crude<\/a>\u00a0into commercial and strategic inventories for nearly a year\u2014taking advantage of lower international prices and even lower prices for sanctioned supply out of Iran, Venezuela, and Russia.<\/p>\n Venezuela is now back on the legit market with sales under the control of the U.S., but China has started\u00a0buying record<\/a>\u00a0volumes of Russian crude as India has retreated.<\/p>\n Related: Trump\u2019s Secret Weapon in the Rare Earth War<\/strong><\/a><\/p>\n No one really knows the extent of Chinese inventories, but with low prices and expanding storage capacity, Beijing \u2013 which doesn\u2019t disclose stocks \u2013 is estimated to have sent at least 1 million barrels per day of crude to storage last year.<\/p>\n Unlike the United States, China does not report inventories. Analysts are looking at overall supply (domestic production plus imports) and refinery processing rates to estimate how much crude is going into strategic or commercial reserves and how much is being processed into fuels.<\/p>\n Last year, despite the easing of the OPEC+ cuts, the large supply growth from the Americas, and the continued flow of sanctioned Iranian, Russian, and Venezuelan barrels, oil prices did not collapse.<\/p>\n For most of 2025, international crude benchmarks held steady at about $60 per barrel, which China apparently considered cheap enough to buy more crude than it immediately needed and put it in commercial or strategic storage.<\/p>\n Last year, China boosted its crude oil imports to an annual all-time high. The record imports came despite weak transportation fuel demand and struggles on some fronts in the Chinese economy amid the constantly changing U.S. tariff policy and chaotic global markets, including commodity markets.<\/p>\n Stockpiling Pays Off<\/strong><\/p>\n This year, in light of the latest flare-up in the Middle East, which is now burning and severely disrupting energy supplies, China\u2019s move to build up inventories when oil prices were low is paying off.<\/p>\n \u201cChina has been very wisely stockpiling a lot of crude last year so they have a buffer to overcome the current crisis,\u201d Jorge Le\u00f3n, head of geopolitical analysis at Rystad Energy, told Bloomberg Television<\/a> earlier this week.<\/p>\n Related: Magnet Wars: How the U.S. Plans to Break China\u2019s Grip on Rare Earths<\/strong><\/a><\/p>\n China, whose independent refiners have never shied away from sanctioned oil supply, has the alternative to buy up Russian and Iranian crude amassed in floating storage, most of which is sitting far from the Strait of Hormuz<\/a> and not far from Chinese ports in Asia.<\/p>\n As of February 27, 2026, the day before the U.S. and Israeli strikes on Iran, total Iranian crude oil on the water globally stood at about 191 million barrels<\/a>, according to Kpler estimates.<\/p>\n Of this total, around 25 million barrels remain within the Mideast Gulf, mainly comprising cargoes that were recently loaded. But most of the remaining 166 million barrels, about 127 million barrels, are currently in the East, including the Malacca Strait, Singapore Strait, South China Sea, East China Sea, and Yellow Sea, while around 39 million barrels are located in the Arabian Sea and Gulf of Oman, possibly en route to the East as well, Kpler notes.<\/p>\n In addition, China \u2013 and India, for that matter \u2013 have a strong incentive to boost Russian crude supply, Kpler\u2019s Amena Bakr said in a Sunday note<\/a>.<\/p>\n \u201cChina also holds significant strategic crude reserves accumulated during the period of global oversupply. This provides a buffer in the short term but positions Beijing as a potential re-exporter to third markets if the supply crunch deepens,\u201d Bakr noted.<\/p>\n