New Delhi: Indian refiners are hoping that the massive emergency crude stockpiles China built up last year, when oil prices were much lower, could indirectly ease their supply crunch stemming from the US-Israel war on Iran.
The widening conflict in the Gulf region has sharply squeezed global crude supply and sent prices soaring, with Brent topping $89 per barrel on Friday.
To deal with the supply disruption as well as shield its consumers from soaring global prices, China may allow its refiners to draw down emergency stockpiles, an Indian refinery executive said. If that happens, it would reduce pressure on international supplies and free up cargoes for buyers like India to replace lost Gulf volumes, he added.
China is estimated to have accumulated crude at a pace of about 0.4 million barrels per day (mbd) to 1.1 mbd through 2025. Its total crude stocks are estimated at 1.1-1.3 billion barrels, equivalent to roughly 110-140 days of import cover.
Another executive, however, cautioned that the decision to tap reserves cannot be purely commercial and China would likely weigh the strategic implications, especially the potential impact on the course of the war or the interests of the US or Iran.
“China’s accelerated stock builds are closely linked to the perception in Beijing of heightened geopolitical tensions, including greater propensity for sanctions (mainly by Washington) and more potential conflicts in producer countries,” said a paper by the Oxford Institute for Energy Studies.
Besides, China’s revised Energy Law, which came into effect in January 2025, requires both state and private companies to hold reserves.
China’s large purchases to build its emergency stockpile also supported global prices last year. While oil consumption in China plateaued, imports remained strong as a large volume was routed to emergency reserves.
India is a smaller oil consumer than China and holds far smaller storage. With a major source of crude supply cut off from the global market due to the war, China, India and other buyers are seeking replacement barrels.
The US, which holds massive oil in its emergency stockpile, has not signalled that it is open to releasing reserves.
