China Oil Stockpiles Help Limit Iran War Price Surge
China’s large crude oil inventories and sharp reduction in imports have helped moderate the global oil-price impact of the prolonged conflict with Iran, even as Brent crude continues to trade around $100 per barrel.
What Readers Should Know
- China held an estimated 1.4 billion barrels of strategic and commercially held crude inventories at the end of 2025 under the EIA’s methodology.
- China’s crude imports averaged 8.1 million barrels per day in the second quarter of 2026, 32% below the first quarter.
- Reuters estimates China cut seaborne crude imports by as much as 4 million barrels per day from pre-war levels.
- Chinese refiners drew about 640,000 barrels per day from inventories in August.
- China remains Iran’s largest oil customer, complicating U.S. efforts to pressure Tehran economically.
MONTREAL (Oil Monster): More than six months into the U.S.-Israeli conflict with Iran, international oil prices remain elevated, with Brent crude trading around $100 per barrel. However, the most severe forecasts made at the start of the conflict, including warnings that prices could more than double, have not materialized.
Energy analysts cited by the Associated Press say one of the most important factors has been China, the world’s largest crude oil importer.
By drawing on its large crude inventories and sharply reducing imports, China has lowered its demand for barrels on the international market, leaving more supply available to other buyers and helping limit upward pressure on global prices.
China Built a 1.4 Billion-Barrel Oil Buffer
China spent years building a large crude oil stockpile as part of its broader energy-security strategy.
The U.S. Energy Information Administration estimated that China held nearly 1.4 billion barrels of strategic crude inventories at the end of 2025 under a methodology that includes both government-held stocks and certain commercial inventories that effectively serve a strategic role.
The figure should not be compared directly with the U.S. Strategic Petroleum Reserve without qualification because the two totals are calculated differently. The U.S. SPR held approximately 285 million barrels as of September 11, 2026, according to the EIA.
China Slashed Oil Imports After Hormuz Disruption
China began drawing more heavily on inventories after the United States and Israel launched attacks on Iran in late February and shipping through the Strait of Hormuz was severely disrupted.
China’s crude imports averaged just 8.1 million barrels per day in the second quarter, according to U.S. Energy Information Administration data. That was 32% below the first quarter, with imports falling below 8 million barrels per day in May and June for the first time since 2016.
The reduction helped ease competition for available international crude supplies at a time when Middle Eastern exports were under severe pressure.
Reuters estimates that China cut seaborne crude imports by as much as 4 million barrels per day from pre-war levels, absorbing a substantial share of the loss in Middle Eastern supply.
China Drew 640,000 Barrels Per Day From Inventories in August
August data provide a clear example of how China has been using stored crude to support refinery operations.
Chinese refiners processed an average of 13.91 million barrels per day during the month, while imports and domestic crude production provided about 13.27 million barrels per day.
The roughly 640,000-barrel-per-day gap was supplied from inventories, according to Reuters calculations based on official Chinese data.
August marked the third month out of four in which China drew down crude stocks.
Reuters estimated China’s onshore crude inventories at about 1.23 billion barrels as of September 9, although China does not publish comprehensive official data covering strategic and commercial crude stocks.
Electric Vehicles Are Also Reshaping Chinese Oil Demand
China’s ability to reduce crude imports has also been supported by structural changes in domestic energy demand.
The rapid expansion of electric vehicles has reduced growth in transport-fuel demand, while broader efforts to increase domestic energy production and diversify the country’s energy mix have reduced exposure to imported oil.
The Associated Press cited analysts who said China’s energy strategy has helped provide a buffer against the global price shock created by the conflict.
China Remains Iran’s Biggest Oil Customer
China’s role in the oil market is complicated by its continuing energy relationship with Iran.
Chinese buyers remain the dominant customers for Iranian crude despite U.S. sanctions. Reuters has reported that Chinese independent refiners account for roughly 90% of Iran’s oil shipments, with Iranian crude typically sold at discounts to international benchmarks.
The Trump administration has repeatedly urged Beijing to use its economic influence to pressure Iran to reopen the Strait of Hormuz and reduce regional tensions.
U.S. Treasury Secretary Scott Bessent said in May that China was buying about 90% of Iran’s energy exports and called on Beijing to increase diplomatic pressure on Tehran.
China, meanwhile, has opposed U.S. sanctions against Chinese companies buying Iranian crude and has criticized Washington’s military actions against Iran.
China Has Helped Cap the Oil-Price Shock
The result is an unusual market dynamic.
China remains Iran’s largest oil customer while simultaneously reducing its own overall crude imports enough to ease competition for barrels elsewhere in the global market.
AP reported that energy analysts view China’s sharp import reduction as the single most important factor moderating oil prices since the start of the conflict.
Brent crude has still risen sharply from its average level of about $69 per barrel in 2025 and briefly reached $126 in April. But prices have so far remained below some of the most extreme scenarios forecast at the beginning of the war.
Whether that stabilizing effect continues will depend partly on how long China is willing to keep drawing from inventories while maintaining refinery activity and limiting crude imports.
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Courtesy: www.chosun.com