China's Crude Oil Stockpiling Amid Geopolitical Tensions

In early 2026, China has significantly increased its crude oil inventories, with a surplus of 1.24 million barrels per day (bpd) reported for January and February. This figure, while lower than the record high of 2.67 million bpd in December 2025, still exceeds the average surplus of 1.13 million bpd for the entirety of 2025. The increase in stockpiles is attributed to strong imports and domestic output, which outpaced refinery production. During this period, China imported 11.99 million bpd of crude, while domestic production stood at 4.42 million bpd, resulting in a total of 16.41 million bpd available for processing. Refineries processed 15.17 million bpd, leaving a surplus that indicates a strategic accumulation of crude.

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The geopolitical landscape has shifted dramatically due to escalating tensions in the Middle East, particularly following the U.S. and Israel's military actions against Iran starting February 28, 2026. This conflict has led to concerns over the security of oil transport through the Strait of Hormuz, a critical passageway for approximately 20 million bpd of oil and fuels, representing about one-fifth of global consumption. Consequently, Brent crude prices surged to $119.50 per barrel on March 9, 2026, before settling at $100.21, reflecting a 38% increase since the onset of the conflict.

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In response to these developments, China has indicated a potential reduction in crude imports, a strategy it has employed in previous price surges. Reports suggest that some refineries are already scaling back operations, with Sinopec, the world's largest refiner, planning a 10% reduction in processing due to anticipated supply disruptions from the Middle East. Additionally, on March 11, 2026, China implemented a ban on refined fuel exports, a move aimed at conserving domestic supplies amid the crisis.

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Despite the ongoing crisis, analysts question China's reluctance to utilize its substantial crude stockpiles, estimated at around 1.2 billion barrels. Critics argue that tapping into these reserves could not only alleviate domestic pressures but also position China favorably in the regional market by exporting refined fuels to countries facing shortages. This approach could enhance Beijing's political goodwill in Asia during a tumultuous period.

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China's actions reflect a cautious approach to managing its energy resources amid external pressures. While some view the decision to halt refined fuel exports as a prudent measure, others criticize the lack of engagement with its crude reserves. The Chinese government has not publicly addressed these criticisms, focusing instead on stabilizing domestic supply chains.

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There remains a lack of transparency regarding the exact volumes of crude oil in China's strategic and commercial stockpiles, as the government does not disclose specific figures. This opacity complicates the assessment of China's true inventory levels and its potential responses to market fluctuations.

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• “China has already signalled that it is likely to hunker down from a crude and refining perspective during the current crisis, with reports of some refineries cutting runs and Beijing banning the export of refined products.” — Analyst, Market Insights

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• “It could be argued that China's authorities are taking sensible precautions amid an uncertain situation not of their making.” — Energy Expert, Global Analysis

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