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China has quietly accumulated the world’s largest crude oil reserves.
This is no small feat for a country that is also the world’s largest energy importer.
It brings a new dynamic to Beijing’s relations with the United States, as Prime Minister Xi Jinping prepares to host President Donald Trump for a high-level state visit on May 14 and 15.
“Teapot” Party
There is already controversy. China’s Ministry of Commerce banned Chinese companies from complying with US sanctions on small refineries buying Iranian crude. According to Teneo, so-called “teapot refineries” have been encouraged by Chinese authorities to import Iranian oil because they are considered immune from foreign sanctions. The research house warned that China’s non-compliance with sanctions could prompt Washington to launch a second round of sanctions to curb Sino-Iranian trade.
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According to Kepler, oil markets are no longer dealing with flow disruptions, but with accelerating stock shocks. The analysis group says most Middle East cargo loaded before the war has now been discharged, meaning inventory drawdowns will accelerate and local refining will slow.
The US Energy Information Administration (EIA) estimates that China added an average of 1.1 million barrels of crude oil per day to strategic reserves in 2025, with “preliminary government data indicating that China continued to build inventories into 2026 ahead of the Iran conflict”.
This means that China’s government and commercial oil reserves averaged about 360 million barrels in December 2025, compared with US strategic reserves of about 414 million barrels over the same period.
China’s massive purchases of crude amid the Strait of Hormuz standoff have helped prevent oil prices from rising even further. It has also provided a lifeline to Asian importers who have been most directly affected by the disruption in Middle East energy deliveries.
crude diplomacy
For China, rising tensions with the US and sanctions-related disruption mean strategic petroleum reserves are acting as a hedge against supply disruptions, price volatility and currency instability, according to the Oxford Energy Institute.
BUSAN, SOUTH KOREA – OCTOBER 30: U.S. President Donald Trump and Chinese President Xi Jinping react after posing for photos before a bilateral meeting at Gimhae Air Base on October 30, 2025 in Busan, South Korea. Trump is meeting Xi for the first time after taking office for his second term following months of rising tensions between the two countries. (Photo by Andrew Harnick/Getty Images)
Andrew Harnik | Getty Images News | getty images
More to watch this week:
Monday: EU Foreign Affairs Council meeting
Tuesday: German inflation data, US inflation data
Wednesday: OPEC monthly oil market report, IEA oil market report
Thursday: UK GDP data, BRICS foreign ministers meet
Friday: Credit Rating Reviews: Germany, Italy and Ukraine
