In response to geopolitical risk associated with persistent international energy volatility, China has accelerated the expansion of its commercial and strategic oil reserves. This is especially important to China’s energy security strategy, which aims to build 169 million barrels of capacity across 11 new sites by 2026. The accumulation will have further implications for global oil supply and prices, as well as China’s influence over global energy security.
China’s oil reserves: A staggering start in efforts to decrease dependency
China began its mission following global energy disruptions that followed the Russia-Ukraine conflict in 2022. In 2023, Beijing made the first step by mandating state firms to start procuring oil reserves. Also in 2023, some state-owned oil companies had begun stockpiling initiatives as early preparations. Approximately 37 million barrels of new oil reserves were either finished or in the process of being built by the middle of 2025. This is an excellent demonstration of China’s momentum as rising energy volatility continues.
Moving at an incredible pace, China is now averaging 530,000 barrels per day for oil reserves. When fully functional, China’s target of 169 million barrels of oil reserves is approximately equal to two weeks’ worth of China’s total crude imports. China has a long-standing reliance on crude oil imports, exposing the country to external risks and strategic vulnerabilities. This is important as countries are already experiencing shocks in the sector, such as the U.S.
China is developing a host of 11 new sites to store its planned oil reserves. These sites are distributed across the nation to maximize resilience against any supply disruptions, and especially regional threats. Accounting for around 11 million barrels of additional storage capacity are the Shaanxi facilities that are located inland. The Hainan site hosts a storage capacity of 20 million barrels of oil reserves. China’s accelerated stockpiling allows the country to decrease its dependency on the global supply chain, which will undoubtedly impact the international market dynamics as well as price formation.
China’s strategic and commercial energy reforms
In 2025, China officially passed a law that merged commercial and strategic oil reserves to advance national oversight. The law introduced some key changes:
- All barrels held in commercial storage would now count toward the country’s national reserves, and essentially any distinctions between ‘commercial’ and ‘strategic’ oil reserves would be removed.
- All state-owned oil reserves would report to the National Food and Strategic Reserves Administration.
- Commercial oil reserves would now be considered emergency buffers for any energy security emergencies.
This reform allows the Chinese government to tightly oversee all oil stocks and work toward coordinated management. These changes have already been put in place and seek to ensure energy security remains a long-term strategic priority for the country. China’s approach definitely provides a soft landing for the country in any case regarding sanctions, shipping distributions, or regional crises that would otherwise destabilize the market, especially with its current reliance on crude oil imports. Other initiatives include
China’s strategy has global energy market consequences
China’s acts have shown that the country seeks leverage in energy diplomacy as it shifts its position towards the international energy market. The merging of China’s commercial and strategic oil reserves will give China a large influence over price formation, with large-scale stockpiling possibly distorting short-term global price cycles.
With the objective of having the ability to provide the equivalent of 6 months’ worth of crude oil imports (2 billion barrels of oil reserves), China’s strategy reduces global supply flexibility, which tightens the market for other importers. This approach is also in direct contrast with the U.S. drawdowns from the Strategic Petroleum Reserve during crises. The U.S. has particularly noted that the Russia-Ukraine war will have a continued impact on worldwide oil supply, something China is aiming to curb.
The long-term strategy highlights China’s initiative to enhance national energy security and advance the management of energy emergencies, sudden supply shocks, or market disturbances. There is a lot of attention on China as it moves forward with its acceleration, evolving from a large oil importer to a country with market independence and geopolitical influence.