Strategic reserves, diversified efforts underpin economic resilience

China's decades-long efforts to fortify its energy security have provided the world's largest oil importer with a massive strategic buffer, capable of covering a total cutoff of Middle Eastern crude for approximately six months.

As tensions rise between the United States and Israel on the one side, and Iran on the other — effectively closing the Strait of Hormuz, a vital artery for 20 percent of the world's oil — Beijing remains positioned to avoid a short-term "fuel shut-off" crisis, said industry experts.

The General Administration of Customs said China's crude procurement in January and February surged 16 percent year-on-year to 96.93 million metric tons, further padding its existing stockpiles at a time of extreme global volatility.

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China's total crude oil imports reached 578 million tons last year, representing a 4.4 percent year-on-year increase. The primary sources were Russia (17.4 percent), Saudi Arabia (14 percent) and Iraq (11.2 percent), it said.

The cornerstone of China's energy resilience is a strategic petroleum reserve (SPR) estimated at approximately 1.4 billion barrels, or roughly 190 million tons, said Columbia University's Center on Global Energy Policy.

Erica Downs, a senior research scholar at the center, said that even in a worst-case scenario where Middle Eastern supplies are completely severed, these reserves could sustain the nation's needs for six months.

China has spent the past 20 years continuously building and filling its strategic petroleum reserves to prepare for moments like this, said Downs.

According to an analysis published by OCBC, a Singaporean banking and financial services group, the Chinese economy is resilient amid the ongoing volatile market due to its declining structural dependence on oil.

This is supported by "the rapid penetration of electric vehicles, increased substitution through coal-to-chemicals feedstock and a power generation system that is largely insulated from oil price fluctuations", it said.

The Strait of Hormuz saw over 14 million barrels per day flow through last year, constituting around a third of the world's total seaborne crude exports, according to data from Kpler.

Major oil and gas producers in the Middle East use the waterway to transport energy from the region and about three-quarters of those barrels went to China, India, Japan and South Korea, it said.

Fu Fangjian, associate professor of finance at Singapore Management University, said the current price volatility is largely a product of financial market speculation.

"Everyone has some reserves,"Fu said, adding that the impact on the real economy would likely remain manageable in the near term. "China should be able to hold out for at least six months to a year."

Lu Ruquan, president of the China National Petroleum Corp Economics and Technology Research Institute, said a robust energy framework of strategic diversification — combined with massive strategic reserves and expanding land-based supply routes — created a "resiliency shield" capable of enduring most significant maritime disruptions.

"While a prolonged blockade would undoubtedly roil global markets, it is unlikely to significantly disrupt China's overall oil supply or import stability," Lu said.

While China's oil dependency on foreign sources remains high at over 70 percent, crude oil accounted for only 18.2 percent of China's total energy consumption in 2024.

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Lu added that China's structural preparedness has effectively mitigated vulnerability to the region's volatility, despite market concerns.

Non-strait routes — including pipelines from Saudi Arabia and Iraq to the Red Sea and the Mediterranean Sea — could also offer viable alternatives that ensure the physical flow of oil continues, even if maritime "choke points" are restricted.

Beyond oil, China's energy security is anchored in its domestic resources. The country has been deepening energy cooperation with oil-rich economies, such as Kazakhstan.

By utilizing the China-Russia and China-Kazakhstan crude oil pipelines, Beijing has secured a steady and growing supply of land-based oil that is entirely immune to maritime blockades or naval tensions in the Middle East, he said.

Contact the writers at zhengxin@chinadaily.com.cn