Oil & Gas

BUSINESS DYNAMICS

In 2025, China consistently imported more crude than it needed for domestic refining, channeling the excess into storage and effectively smoothing price volatility. For the first 11 months of the year, surplus crude averaged about 980,000 barrels per day, reflecting imports and domestic output of 15.80 million bpd against refinery throughput of 14.82 million bpd. This pattern shows a strong correlation between China’s inventory flows and oil prices: when prices dipped, China increased buying; when prices rose, it pulled back. This behavior helped anchor Brent crude within a relatively narrow range around $65 a barrel in the second half of the year, even as global supply pressures mounted.

ECONOMIC IMPLICATIONS

With OPEC+ reversing earlier production cuts and now holding output steady in early 2026, China has effectively absorbed much of the excess supply that might otherwise have pushed prices sharply lower. Estimates suggest China holds between 1 billion and 1.4 billion barrels in total crude storage, though a large portion is commercial stock, leaving strategic reserves closer to 500 million barrels. Beijing is continuing to expand storage capacity, with state firms such as Sinopec and CNOOC adding at least 169 million barrels across multiple sites in 2025 and 2026. If China maintains storage inflows of around 500,000 to 600,000 bpd, it could absorb a significant share of the forecast global oil surplus next year, providing a de facto price floor.

GEOPOLITICAL SHIFT

China’s growing influence marks a fundamental shift in oil market power away from producers and toward major consumers. With seaborne crude imports of roughly 10 million bpd around a quarter of the global total Beijing’s inventory decisions now rival OPEC+ output policy in importance. Unlike producer alliances, China operates with limited transparency, as it does not disclose strategic or commercial stockpile data, adding uncertainty for traders and policymakers alike. What is increasingly clear, however, is that China is willing to use storage as a pricing tool, setting both a floor and a ceiling for oil prices. As a result, global oil markets in 2026 may be shaped less by decisions in Vienna and more by quiet signals coming from Beijing’s storage tanks.