China’s oil stockpiles helped avert energy crisis, S&P Global economist says

China's years of strategic crude oil stockpiling have helped shield the global economy from a deeper energy crisis as the U.S.-Iran conflict continues to disrupt supplies through the Strait of Hormuz, but that cushion may be wearing thin as Beijing resumes purchases.

Strategic Reserves Prove Their Worth

"China kind of saved the day," Paul Gruenwald, global chief economist at S&P Global Ratings ↘ 1.39%, said at a conference in Singapore on Thursday, adding that China's reserves helped the world avoid a "doomsday scenario" when the Strait of Hormuz closure choked off roughly 20% of global energy supply. The U.S. Energy Information Administration estimates China holds 1.4 billion barrels of strategic crude oil inventories, compared with 825 million barrels in the U.S. as of December 2025. China's crude imports dropped below 8 million barrels a day in May and June, falling for the first time since 2016, as the country drew down stockpiles instead of buying on the open market.cnbc

Oil analysts had initially forecast prices surging to $150 to $200 a barrel after the conflict broke out in late February. "Not only did we get the magnitude wrong, sometimes we got the direction wrong," Gruenwald said. Brent crude prices crossed $100 a barrel on Wednesday amid renewed hostilities but remained at levels economists consider manageable.globalbankingandfinance+1

Renewed Hostilities Test the Buffer

The latest escalation saw Iran attack 10 ships near the Strait of Hormuz after the U.S. sank five Iranian oil tankers, with Iran's Islamic Revolutionary Guard Corps vowing further retaliation. Brent crude futures dipped slightly on Thursday but held above $100 a barrel, having surged nearly 30% from early August lows. President Donald Trump warned Wednesday that the U.S. may strike Iran's Pickaxe Mountain, urging Tehran to exercise caution.globalbankingandfinance

Dan Wang, China director at Eurasia Group, said Beijing holds roughly four months of crude in national reserves, and a new energy law enacted last year requires major oil companies to hold additional reserves. Coal, which supplies about 53% of China's energy mix, has acted as a shock absorber, allowing the economy to substitute away from oil.cnbc

Rising Chinese Demand Could Push Prices Higher

Signs are emerging that China's import restraint may be fading. Crude imports rebounded 22% and 6.2% month on month in July and August, respectively. ING analysts noted that China has stepped up purchases in recent weeks, boosting physical crude markets. Chinese refiners are also intensifying spot purchases of Russian Pacific coast crude as supply options narrow.cryptobriefing+2

Krishna Srinivasan, director for the Asia and Pacific Department at the International Monetary Fund, warned that if China resumes importing at its pre-war pace, the drag on global growth from elevated oil prices would deepen well beyond current estimates. Goldman Sachs The Goldman Sachs Group, Inc. ↘ 1.43% economist Daan Struyven cautioned that prices could still reach $120 a barrel as the war, now in its seventh month, continues to disrupt shipping.cnbc