Why Is China Stockpiling So Much Oil?
Beijing is buying crude it doesn’t need and stirring conspiracy theories.
An oil tanker arrives at the port in Qingdao, in China's eastern Shandong province.
Photographer: STR/AFP The big question troubling the energy market now is why China is stockpiling so much oil. In problem-solving, the principle of Occam’s razor recommends searching for the simplest explanation. So perhaps the answer is as straightforward as “because it’s cheap.” Still, the conspiracy theorist in me says there’s more to it.
China has purchased more than 150 million barrels — costing about $10 billion at current prices — above its actual use so far this year. For a country that buys more electric vehicles than anywhere else, that demands dissecting.
The stockpiling was exceptionally high during the second quarter, when the International Energy Agency estimates that China absorbed over 90% of the global stockpiling we can measure. That has helped support prices this year, and with the oil market forecast to move into a huge surplus, whether China continues its buying spree — and for how long — is crucial for 2026.
Here, we should admit what we don’t know. At the annual Asia-Pacific Petroleum Conference last week in Singapore, oil traders agreed only that China has the capacity to store more crude. Beyond that, “nobody has a crystal ball about the duration of Chinese buying for its strategic storage,” Ilia Bouchouev, a former oil trader and now a senior research fellow at the Oxford Institute for Energy Studies, recently said. Be skeptical of anyone claiming to know what the Chinese Communist Party plans. Instead, I’ll offer some educated guesses about the factors at play. Importantly, Chinese policy is multidimensional, so several considerations are probably intertwined.
Let’s start with the simple explanations:
1) Opportunistic buying. Chinese commodity officials have demonstrated they are canny traders (look at their copper purchases, for example) with a very long-term view. And oil is cheap. In real terms, adjusted by the cumulative impact of inflation, West Texas Intermediate is changing hands at about the same price as 20 years ago.
2) The opportunity is moot if one lacks the capacity. For China, the timing was right: Lots of storage has come online recently, and plenty more is available for 2026. Even now, about half of China’s tanks and caverns are empty, according to market estimates.