How China eased pressure on oil markets by halting purchases and relying on reserves

China has mitigated pressure on oil markets by ceasing crude oil purchases and drawing on its extensive strategic reserves, according to recent reports. The world's largest crude oil importer saw an increase in its oil imports surplus by 210,000 barrels per day (bpd) in July, a surprising development given the drastic decline in imports since March 2026.

This surplus can be attributed to Chinese refiners curbing production faster than exports, rather than a surge in crude imports. Analysts suggest that China's decision to prioritize domestic consumption over foreign purchases has helped stabilize oil prices, which have risen by only around 50 percent since the beginning of the year, stabilizing near $85-90 a barrel.

Despite this, the Strait of Hormuz remains a significant concern, as its closure could have significantly disrupted global oil supplies. However, China's strategic reserves, which amount to over 1.2 billion barrels and could last at least a year, have helped absorb a supply shock and prevent further price hikes. The country has maintained its reserves, built up gradually over two decades and accelerated since 2022, while simultaneously reducing seaborne crude imports by over three million bpd.

China has partially lifted some restrictions on refined product exports and briefly imported Gulf crude, but economists believe that a full resumption of reserves replenishment could have substantial implications for global oil markets.