China’s crude stockpiling has emerged as a critical factor underpinning global oil prices, with Brent M1 futures holding above US$65 per barrel in recent months despite OPEC+ unwinding production cuts at a faster-than-expected pace since May.
Analysts say Beijing’s aggressive inventory build has provided a temporary floor to the market, even as wider supply-demand dynamics have pointed to softer fundamentals.
Data shows China has stored 156 million barrels of crude since March, at an average rate of 1.16 million barrels per day between March and June.
According to Rystad Energy’s latest market update, this stockpiling spree is unique given the pricing environment.
“China’s oil stockpiling goes against the grain as the global oil market has been in firm backwardation - where current prices are above future delivery prices – which does not support crude oil storage,” said Lin Ye, Vice President, Oil Markets – Downstream, at Rystad Energy.
“Conversely, crude inventories outside China have declined during the same period.”
Lin added: “China’s stockpiling has provided a temporary price floor by mopping up excess supply, yet its efficacy is constrained by geopolitical factors, global supply changes and Beijing’s policy redirection.
“It is important to note that China’s crude inventory changes are a critical buffer for the global oil market, and not a permanent solution.”
Much of China’s buying spree has been influenced by geopolitical pressures.
Continued sanctions on Iran, alongside fresh U.S. measures against Russia introduced in January, disrupted crude flows early this year.
While imports from Russia, Iran and Venezuela slowed in January, volumes recovered quickly from February and reached new highs in March as Chinese refiners found workarounds, including using sanctioned “dark fleets” to ship crude to Shandong ports.
Independent refiners, often willing to accommodate higher risks, led much of the stock build to hedge against fears of tougher Western sanctions and multiple sanction packages expected to roll out.
Iranian crude shipments are poised to rise further in September, with many cargoes still awaiting discharge at Chinese ports.
At the same time, China has also adjusted its broader trade flows in response to U.S. tariffs.
While ethane and propane from the U.S. remain tariff-exempt, China has sought alternative sources for natural gas liquids, increasing reliance on crude oil as a feedstock to support its expanding refinery capacity and “crude-to-chemicals” strategies.
Falling landed crude costs have added an economic rationale for storage.
Average import costs fell sharply to US$72.7 per barrel in April, a level not seen since the pandemic, and slipped below US$70 in subsequent months.
Saudi Arabia’s decision to cut official selling prices in April and May further boosted Chinese refiners’ appetite for storage, particularly for grades optimised for China’s processing configuration.
Seasonal refinery outages also created conditions conducive to stockpiling.
Sinopec in particular recorded around 1.2 million barrels per day of lost capacity in April and May, which meant inventories could be filled at a discount while plants underwent maintenance.
Once those refiners return online, they are expected to increase throughput, aided by ample reserves.
China has been steadily expanding its crude storage network as part of its longstanding energy security priorities.
From 1.4 billion barrels in 2015, total capacity grew to 2.03 billion barrels by the end of 2024, with a further 124 million barrels to be added by the end of this year.
Storage growth is also being driven by new refining projects, including Yulong’s second train, Sinopec’s Zhenhai expansion and CNOOC’s Daxie project.
While stockpiling eased in July and August, analysts expect activity to pick up again in September.
Rystad’s base case outlook shows inventories rising further through the fourth quarter of 2025 and into 2026, albeit at a slower pace than this year.
The persistence of geopolitical risks, combined with weaker oil market fundamentals, will likely sustain incentives for China to continue storing crude.
Surplus supply looms as a growing concern, with OPEC+ unwinding cuts and non-OPEC producers expanding output.
Rystad estimates that a crude surplus of 2.14 million barrels per day in the fourth quarter could drag prices lower, creating fresh opportunities for Beijing to buy and store at discounted levels.
China’s stockpiling spree may be cushioning the market now, but as Rystad notes, it is an imperfect buffer.
With oil markets facing mounting uncertainties, the scale and pace of China’s buying will remain a defining force in shaping global price trends into 2026.
