Chinese oil imports boom, with giant volumes going to strategic reserves. How much? Nobody knows.

Bullets:

China imports more oil than Saudi Arabia pumps, despite peaking domestic consumption.

Energy independence is a crucial component of Chinese national security, and vast stockpiles for oil reserves have been built, with more coming.

Western analysts can only make educated guesses as to the true size of China’s oil trade and stockpiles. Huge trading volumes are done outside the US dollar, and with fleets of shadow tankers and pipelines.

China’s immense presence in the oil trade is ironically keeping prices higher in Western markets, even while Chinese firm themselves buy from sanctioned companies and countries at steep discounts.

The YouTube video for this report may be found here:

Report:

Good morning.

China is heavily dependent on imports to meet fossil fuel demand, for crude oil and for gasoline. It is a national security issue for them, and is a huge driver for China’s electrification of its transportation systems. And so even while China continues to develop, and millions of families here buy new cars every year, consumption of crude oil is forecast to peak in 2027 and then decline:

Chinese officials then have made big moves on the demand side, but on the supply side there are some important trends that require our attention too. Through the end of September, China is aggressively buying crude oil in global markets, and putting much of it into storage.

On average China imports 11 million barrels of oil a day, which is more than the daily output for all of Saudi Arabia. Most of this oil is not inbound from Saudi, it’s just a frame of reference, for comparison. China’s the world’s top importer, and also the largest buyer of Russian oil. China is also Iran’s most important customer. Geologists are scouring the country here to find new sources of crude, and domestic companies are investing heavily in new production, but China still is heavily reliant on imports, at 70% of consumption.

So China buys a lot of oil, and they’re being helped by low global crude prices. Ironically in fact, Chinese buys for of all this crude are keeping prices much higher than they otherwise would be. Brent is down double-digits on the year, and the chart for West Texas Intermediate, which is the US benchmark, follows the same trend—a big spike in the summer, then grinding lower.

China’s buying is putting a floor on prices, and if it stops or even slows down, oil prices for Brent will have a 5-handle in a hurry, on their way to $50 a barrel.

Here is a historical chart for China’s monthly imports, which also tracks the growth in China’s economy at large:

In 2010 China’s oil imports were 15 million tons a month, and today they’re 47 million tons a month. Remember again that this is against the backdrop of skyrocketing domestic adoption of electric vehicles, yet import demand more than tripled.

Very high volumes of these imports are also going to China’s strategic reserves, and nobody outside China is certain how big those reserves even are. They began construction just about twenty years ago, and they’re scattered across the China.

The best Western analysts can do is estimate how much oil is coming out of the ground how, estimate how much is being imported, and then subtracting other estimates for how much China is burning nationwide. All of those are guesses, and even more so now because so much of this trade now is outside the US dollar, so we don’t see it at all. Russia and China are developing a comprehensive network of pipelines that will bring in vast supplies of crude and natural gas from fields there, and neither Russia nor China is obligated to tell anyone how much is going through those pipes.

But many analysts figure that China’s current stockpile of reserves is around 1.3 billion barrels, which is already sufficient to protect China from supply chain shocks. About two thirds of those are held by Chinese oil companies.

So China is rapidly building up its reserves, and has been for a while, while in the United States it’s going the opposite direction. The Strategic Petroleum Reserve was drained by the Biden Administration, in a bid to push down oil prices there. The total capacity of the SPR is about 700 million barrels, and more than 180 million barrels were sold off. During the election campaign last year, Trump promised to would fill it up again. But they’re taking their time about it. Just one announcement so far, for a buy of one million barrels of crude, and that was just last month.

Back to China then. The SPR in the US has total capacity of 700 million barrels, but China has much more. Again, these are just educated guesses here, but analysts’ estimates for China’s reserve capacity is about 2 billion barrels, which itself is up over 40% since just a decade ago. So energy insiders figure that China may be using only 60% of what’s available to them now, with more than a hundred million additional barrels of capacity coming online in 2025.

China then has a lot more storage capacity than the United States, and they’re building a lot more, though that’s a natural consequence anyway of China’s dependency on imports, which is not true of the United States.

But there’s another important aspect to the issue. So much of the global oil trade is now done outside the US dollar, and that wasn’t even possible until very recently. It’s only in the past two years that we see enormous volumes of trade between countries under sanction by Western governments.

The whole point of freezing and seizing foreign exchange reserves, and black-listing companies from accessing trading systems, is to prevent countries like Iran or Russia from having oil markets at all. But two thirds of the oil trade between Russia and China is settled in renminbi. China famously gets their Russian energy at a discount to other buyers anyway, and Russia is one of the world’s lowest cost producers of crude oil.

These data are old and any estimates for what they are recently are just educated guesses too. But even with the lower prices Russia gets by selling to China, it’s a much more profitable market for them because of the volume done, the fact that China is right next door, and that the trade is done completely outside the USD and SWIFT systems.

To emphasize yet again, how often our top industry experts are flying blind and making their estimates, best they can. We don’t know for sure how big all this trade is, or how fast it’s growing. We only know that it is already very big, and still growing very fast.

Be Good.

Resources and links:

Brent, WTI charts from www.finviz.com

Wall Street Journal, How China Curbed Its Oil Addiction—and Blunted a U.S. Pressure Point
https://www.wsj.com/world/china/china-oil-demand-lower-b5ae15ed

Wall Street Journal, China Is Filling Up Its Oil Reserves Fast
https://www.wsj.com/business/energy-oil/china-is-filling-up-its-oil-reserves-fast-444b8edb

China’s internal combustion car sales peaked in 2017 as electric vehicles took off
https://ourworldindata.org/data-insights/chinas-internal-combustion-car-sales-peaked-in-2017-as-electric-vehicles-took-off

China, Russia building NatGas pipelines for energy previously headed to Europe, with lower prices

Now it’s oil: China, BRICS and OPEC+ build new trading system, locking out US suppliers and banks

X, Cost of oil production in some OPEC countries and break-even oil prices, from Rystad Energy
https://x.com/WaelMahdi/status/688614542746599424

U.S. to Buy 1 Million Barrels of Oil for Strategic Petroleum Reserve
https://www.wsj.com/livecoverage/stock-market-today-dow-sp-500-nasdaq-10-21-2025/card/u-s-to-buy-1-million-barrels-of-oil-for-strategic-petroleum-reserve-D50m778L2XPt5buBmqX0