China is filling up its oil reserves fast

China has spent months building up its oil reserves. That might come in handy in the wake of the new sanctions the U.S. recently imposed on Russian crude.

- Rebecca Feng [e-mail]

China's crude oil storage capacity rose to just over 2 billion barrels at the end of 2024 from 1.4 billion barrels in 2015. REUTERS

During the first nine months of the year, the world’s second-largest economy imported on average more than 11 million barrels of oil a day, an amount above the daily production of Saudi Arabia, according to official customs data. Analysts estimate 1 million to 1.2 million of those barrels were stashed in reserves each day.

Low oil prices and concern over Ukraine’s repeated attacks on Russia’s production facilities help explain the timing of the buying spree, which accelerated in March. China is the world’s biggest importer of crude and the largest buyer of Russian oil.

Energy security has long been a priority for China's leaders. The country’s dependence on foreign nations for its crude oil—China imports about 70% of the oil it consumes—is a headache.

“The energy rice bowl must be held in our own hands,” Chinese leader Xi Jinping has said repeatedly over the years. China’s robust appetite for oil has had another unintended consequence: It has helped put a floor on prices, which approached a nearly five-year low in October. Brent crude, the international benchmark, is trading near $65 a barrel and is down 13% this year. It bounced higher following the sanctions the U.S. placed on Rosneft and Lukoil, Russia's two largest oil companies.

“If China really stops buying, the path toward low $50 would be very quick,” said Michael Haigh, global head of fixed-income, currencies and commodities research at Société Générale.