Oil producers are rapidly spinning up the supply flywheel. This week, crude oil exports from Saudi Arabia hit an 18-month peak of 6.42 million barrels per day. Despite this increase, oil prices remain rather steady, holding in the $60–$70 per barrel range. One reason for this might be China’s efforts, which has been purchasing oil for its strategic reserve for many months. Why the PRC is doing this and what long-term industrial stockpiles are for—in an article by “Izvestia.”
Oil Holds Firm Despite OPEC+
OPEC+ is boosting production almost every month this year. The oil consortium and the allied group of nations led by Russia are disregarding moderately negative news from the global economy (tariffs, trade wars, the unsatisfactory economic condition of the European Union, the growth of green energy and the electric vehicle industry), striving primarily to reclaim their market share.
On October 5, the group’s members discussed the timeline for adding 1.66 million barrels to the market (specifically, 137 thousand barrels per day in November)—volumes that were frozen in prior years due to the necessity of maintaining prices at an acceptable level. Since the beginning of May, over 2.3 million barrels have entered the market. Saudi Arabia is the process leader, having suffered the greatest losses when production limits were imposed, and is now regaining what was lost. It is worth noting that several nations not part of OPEC+—Brazil, Guyana, and Canada—have also increased supply.
Such a sharp augmentation in supply should have significantly impacted prices. However, the effect so far is quite moderate. The Brent benchmark, for instance, is currently priced around $65 per barrel, despite an almost 2 million barrel surplus that the IEA forecasts may emerge globally. A distinct downward trend is not yet apparent. And, it seems, China’s purchases play no small role here.
China’s oil consumption is unlikely to surge much this year; most forecasts suggest a modest range of 50–100 thousand barrels per day above last year’s figures. This is very little, considering the overall growth of the Chinese economy. This situation arises due to the ultra-rapid electrification of a significant portion of the Chinese vehicle fleet. The PRC manufactures more “electric cars” than any other nation by a vast margin, but trade wars are currently compelling manufacturers like BYD to focus on the domestic market (although external sales are growing, just more slowly than Chinese corporations would prefer).
2 Billion Barrels
The other side of the coin is that China has been very rapidly increasing infusions into its state oil reserve lately. This year alone, the PRC has acquired about 150 million barrels of oil for this purpose. This figure will obviously climb before the year’s end. The replenishment of reserves was particularly vigorous in the second quarter when, according to International Energy Agency estimates, China accounted for over 90% of global stock accumulation available for assessment. At the annual Asia-Pacific Petroleum Conference in Singapore last week, traders agreed that China possesses the capacity to store far larger volumes of crude than it currently holds.
China’s strategic petroleum reserve is a relatively recent entity. Until the mid-1990s, the country had no need for one, as it produced more than it could consume. In the 2000s, amid sharp fluctuations in oil prices, the decision was made to establish such infrastructure. The first phase of storage facilities, completed in 2009, held 100 million barrels; by 2011, additional sites for another 170 million were opened. Since then, the volume of these storages has continued to expand.
Ivan Timonin, Project Leader at the consulting firm “Implementa,” noted in an interview with “Izvestia” that the replenishment of China’s strategic reserves remains a vital factor supporting global oil prices.
— As of August 2025, the total volume of oil in Chinese storages, including strategic and commercial reserves, reached 1.2 billion barrels, which corresponds to approximately 60% of the total storage capacity, estimated at around 2 billion barrels.
In turn, Nikolay Dudchenko, an analyst at FG “Finam,” explained that reports indicated record accumulated reserves amounting to about 1.18 billion barrels.
— At the same time, the fill rate for above-ground storage slightly exceeds 60%—thus, the PRC can continue its procurement drive, he concludes.
Crude-Gold-Currency Reserves
Thus, China can continue to procure for a long time and could easily remove up to a million barrels per day or even more from the market, considering that new storage facilities continue to be commissioned even this year. Why does the world’s second-largest economy need this?
Bloomberg previously pointed out that Chinese officials responsible for commodities have demonstrated themselves to be astute traders (one need only look at their copper procurements), operating with a very long-term outlook. And oil is inexpensive right now. In real terms, accounting for the cumulative impact of inflation, the most popular American grade, WTI, is trading at roughly the same level as it did 20 years ago.
Furthermore, this year the Chinese administration introduced new rules that effectively increased the requirement for storage. The Energy Law, which took effect on January 1st, codified strategic reserves as a legal requirement for state-owned and private enterprises for the first time. Essentially, the state shares the responsibility for creating stockpiles with the commercial sector, establishing the legal basis for increasing overall oil reserves. Evidently, this decree played a significant role in boosting purchases.
Moreover, China has realized the necessity of bolstering its energy security in a world where the US deploys sanctions and tariffs arbitrarily. Today, China sources 20% of its crude from countries under US sanctions—primarily Iran, Russia, and Venezuela. None of these can guarantee that the US will not be able to at least impede these supplies in the future. Building up reserves is simply prudent. However, it is not entirely clear what constitutes sufficient supply. Currently, China’s reserves are equivalent to 110 days of consumption. This figure could be raised to 140–180 days by 2026.
Finally, China may view crude oil as an alternative to US Treasury bonds. This is a peculiar way to reduce its reliance on American assets and diversify its foreign exchange reserves.
It appears that in 2025, international reserve backing is provided not only by gold but also by crude oil. This line of thinking is far from traditional, but given the trends in international politics and economics, it is entirely legitimate.
There is suspicion that China will not be alone in this drive. Currently, the most famous strategic crude reserve globally is the American one. Its potential capacity exceeds 700 million barrels, which is less than China’s (but one must remember that Chinese facilities include both state and commercial storages, making a direct comparison flawed). The on-hand volume currently reaches 395 million barrels. Since 2021, this American “rainy day” reserve has diminished by more than half. The initiator of the reserve sale was the Joe Biden administration, which was attempting to bring down oil prices.
A national crude reserve is not cheap and demands considerable effort. Nevertheless, such facilities are certain to grow in importance in the coming years. This is influenced both by the need to maintain supply stability amid escalating international tensions and the desire to diversify assets during times of sanctions and trade disputes. Simultaneously, such reserves can become a potent source for balancing oil prices—which is happening before our very eyes.
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