Why China is stockpiling oil at record levels - opinion

China has purchased more than 150 million barrels of crude oil this year, roughly $10 billion worth beyond its immediate consumption needs. The buying spree sets a new record and has prompted debate over Beijing’s motives. Bloomberg highlights the logic behind this.

Opportunistic trading and storage buildout

One factor is opportunistic trading. In real terms, WTI crude is priced at levels last seen two decades ago, and China has a long track record of locking in commodities when prices are favorable. At the same time, recent infrastructure expansion has given the country additional storage capacity. Market estimates suggest that as much as half of its new tanks remain empty, creating room for reserves.

Energy law and strategic motives

Policy changes also play a role. A new energy law, effective January 1, 2025, requires both state-owned and private companies to maintain strategic reserves. Beyond compliance, the purchases serve broader strategic goals. China relies on sanctioned producers such as Iran, Russia, and Venezuela for about 20% of its imports, and building up reserves helps cushion against potential trade conflicts.Currently, China’s reserves cover about 110 days of consumption. Analysts forecast that by 2026, coverage could expand to 140–180 days. Some traders even suggest the buildup is a hedge against possible military tensions over Taiwan.

Oil as an alternative reserve asset

The accumulation may also reflect China’s ongoing efforts to diversify away from U.S. Treasuries. Alongside gold, oil could serve as another reserve asset, allowing Beijing to reduce reliance on dollar-denominated holdings.

Outlook

The consensus among market observers is that China will continue purchasing oil into 2026, absorbing global oversupply and providing support for prices. Whether driven by opportunism, policy, or geopolitics, Beijing’s stockpiling is reshaping the balance of the global energy market.