China’s massive oil reserves give Beijing leverage during Iran war

Investing.com -- China’s vast oil stockpiles have allowed Beijing to slash crude imports during the Iran war, helping contain global oil prices and reducing its vulnerability to supply disruptions, The Wall Street Journal reported Friday.

China’s crude reserves are estimated at between 1 billion and 1.4 billion barrels, equivalent to roughly 120 days of imports. By some estimates, its stockpile last year exceeded U.S. reserves by nearly 600 million barrels.

That cushion has allowed China to sharply reduce purchases since the conflict began. Crude imports fell 23% between March and July compared with a year earlier, limiting competition for disrupted supplies and helping restrain prices.

China accelerated stockpiling beginning in 2024, adding an estimated 1 million to 1.2 million barrels per day. Purchases from Russia and Iran had already increased as discounted sanctioned crude became available.

Between 2022 and 2025, Russian crude imports rose 26%, while Iranian imports more than doubled.

Beijing began drawing down commercial inventories in early May. From then through mid-August, withdrawals averaged around 700,000 barrels per day, although aboveground strategic reserves remained largely intact.

China has also restricted refined-product exports. Gasoline exports plunged 93% year-on-year during the second quarter, diesel shipments dropped about 25%, and jet fuel exports halved.

Refinery runs subsequently fell to roughly 12.5 million barrels per day in June and July from more than 15 million before the war.

Beijing has spent years reducing its exposure to imported oil through renewable energy, electric vehicles, high-speed rail and coal-based chemicals. Renewables generated around two-fifths of China’s electricity during the first half.

Still, the strategy carries economic costs. China relied on imports for about 70% of its crude before the war, and weaker refining activity is weighing on industrial output.

Macquarie estimates the oil and petrochemical sector accounted for 90% of the second-quarter slowdown in Chinese industrial production.