China’s oil reserve drawdown cushions global prices amid renewed Hormuz tensions

China's massive crude oil stockpile — estimated at nearly 1.4 billion barrels at the end of 2025 — has emerged as an unlikely stabilizer for global energy markets roiled by the Iran war and Strait of Hormuz disruptions. But with the country's seaborne imports falling to their lowest in over a decade and inventory drawdowns accelerating, analysts are warning that the buffer has limits.

Record Low Imports, Record Reserve Draws

China's seaborne crude imports dropped to just 5.96 million barrels per day in June, the lowest in more than a decade, according to commodity analysts Kpler. Refiners drew an estimated 41 million barrels from inventories during the month, one of the largest single-month stock draws on record, allowing operations to continue despite imports running roughly 4 million barrels per day below pre-war levels.finance.yahoo+2

The drawdown began in May, when for the first time in 14 months Chinese refineries processed more crude than was available from imports and domestic production combined, according to Reuters. The U.S. Energy Information Administration estimated that China added an average of 1.1 million barrels per day to strategic inventories throughout 2025, building reserves to nearly 1.4 billion barrels by December — including roughly 1 billion barrels in commercial stocks and 360 million in government-held reserves.reuters+1

The Strategic Buffer

The sheer scale of China's reserves has prevented an even sharper global price spike. When the U.S. and Israel launched strikes on Iran on February 28, triggering the near-total closure of the Strait of Hormuz, global supply crashed by more than 10 million barrels per day in March, according to the World Bank. Brent crude surged 65% by end of March but has since pulled back as China's drawdown and other measures eased pressure on physical markets.blogs.worldbank

"China's vast crude stockpile, estimated to contain at least 1.2 billion barrels across both strategic and commercial inventories," gave it flexibility that most other importing nations lacked, Reuters reported in June. Kpler noted that China's ability to draw down inventories at roughly 1 million barrels per day for months "reduces the urgency to procure seaborne crude," keeping the country as a passive buyer.kpler+1

When China Returns

Analysts increasingly view China's eventual return to active purchasing as the key variable for oil prices. Kpler warned in May that "the real oil shock may only begin when China returns" to the market as a major buyer, noting that the current balance "rests on one often overlooked reality: China has yet to return".kpler

Oil prices jumped sharply again this week after the U.S. reinstated its blockade on Iranian ports and imposed a 20% charge on Strait of Hormuz shipping, pushing Brent crude back above $80 per barrel. With the interim ceasefire from mid-June now unraveling, the timeline for China's stock drawdown becomes more pressing. At current rates of approximately 1 million barrels per day, the over 200 million barrels accumulated since early 2025 could sustain operations through mid-September, Reuters reported, citing analysts — but not indefinitely.reuters+1