Since the Middle East war erupted at the end of February, China’s years of oil stockpiling and subsequent reductions in oil purchases have helped the world avoid an even more serious energy crisis. But that buffer could face a test as Beijing shows signs of resuming purchases, economists said.
“China has kind of saved the day,” Paul Gruenwald, global chief economist at S&P Global Ratings, said at a conference in Singapore on Thursday, saying it helped the world avoid a “doomsday scenario” in which the Strait of Hormuz closure cut off 20% of global energy supplies.
The world’s largest oil buyer has cut imports since the outbreak of war and used stockpiles to keep global oil prices in check and protect the economy.
The U.S. Energy Information Administration estimates that China holds 1.4 billion barrels of strategic crude oil inventories as of December 2025, including commercial inventories, compared to 825 million barrels for the United States. The country’s crude oil imports fell below 8 million barrels per day in May and June, the first decline since 2016, the EIA said.
Immediately after the conflict broke out, oil analysts expected prices to soar to between $150 and $200 a barrel due to the sudden supply disruption. “Not only was it the wrong size, but it was also the wrong direction,” Gruenwald said.
Brent crude oil prices had fallen to around $80 a barrel, but have risen again in recent days amid renewed tensions between Iran and the United States in the Gulf region, topping $100 a barrel on Wednesday. But the handle remains “digestible” for the global economy, he said.
However, there are signs that China’s oil imports may be gradually recovering, and that buffer is not without limits.
According to official trade statistics, China’s crude oil imports rose 22% and 6.2% month-on-month in July and August, respectively, but were still well below last year’s levels.
Krishna Srinivasan, director of the International Monetary Fund’s Asia-Pacific directorate, said if China resumes imports at pre-war rates, the impact on global economic growth from soaring oil prices will be far more severe than currently estimated.
beijing model
Kai Guo, chairman and senior fellow at the CF40 Institute, a think tank specializing in China, said the Chinese government was preparing for exactly this scenario, building capacity to reduce oil consumption without hampering economic activity.
He said the crisis vindicated governments’ years of investment in stockpiles and clean energy in the face of a potential disruption to the global oil supply chain.
China has about four months’ worth of crude oil in its national reserves, and a new energy law enacted last year requires major oil companies to hold additional reserves on top of their normal commercial inventories, Dan Wang, China director at Eurasia Group, said on Thursday. “The economy is basically cushioning the impact of this oil crisis,” she said.
Coal, which still supplies about 53% of China’s energy mix, served as an important shock absorber, allowing the economy to displace oil when prices spiked, according to Wang’s estimates.
“This particular China model” would not work well in a normal economy given the investment waste it would imply, but “it works well when such uncertain things happen, especially in Eurasia,” Wang said.
He expects the Gulf standoff to continue for at least a year and that oil prices will remain between $85 and $100 per barrel through 2027.
Goldman Sachs economist Daan Struiben warned in a recent note that prices could still reach $120 a barrel as shipping disruptions continue into the seventh month of the war.
