China’s energy security push pays off as war roils Asia refiners

Published Wed, Mar 11, 2026 · 01:11 PM

CHINA’S vast reserves of crude oil are giving its refiners breathing space as war in the Middle East roils production and shipping, a payoff from years of stockpiling and diversifying supply.

With a record 851 million barrels in onshore commercial inventories, refiners have room to draw down stocks as a cushion against disruptions, a stark contrast to harder-hit Asian countries from Japan to Thailand, where feedstock shortages have forced some plants to declare force majeure on product deliveries.

That flexibility reflects years of deliberate planning. In addition to commercial stocks, its visible strategic inventories add another 413 million barrels, according to geospatial analytics firm Kayrros. But the true figure could be much more, with estimates as high as 1.4 billion barrels once underground cavern storage is factored in. That compares favourably with a US Strategic Petroleum Reserve that currently holds 415 million barrels.

While nearly half its crude still originates in the Middle East, China sources oil from almost every continent. Its firms hold stakes in projects in more than a dozen countries, from South America to the North Sea, spreading the risk beyond any single region. Domestic output, meanwhile, has climbed to a record, as state-owned firms work to limit the vulnerability that comes with being the world’s largest importer of oil.

Beijing’s strategic partnership with Moscow is especially important, helping to lift Russia above Saudi Arabia to the top spot among its suppliers, while Brazilian barrels have roughly doubled in share since 2021.

And for private refiners that do not mind buying sanctioned oil, there’s a growing hoard of illicit barrels that have piled up in Malaysian waters and off China’s coast since the Middle East war broke out.

The government is keeping a firm hand on the tiller. Beijing has moved swiftly to curb diesel and petrol exports to conserve domestic supply. Last year, it introduced a legal requirement for companies, both state-owned and private, to hold reserves that the authorities can tap in emergencies, according to a report from the Oxford Institute for Energy Studies.

Uneven impact

Chinese refineries typically keep around 15 days worth of crude as a buffer, but the sheer size of the sector, which can process up to 20 million barrels a day, means that the impact of the war is uneven. Much depends on a plant’s location, its reliance on seaborne supply, flexibility to process alternative grades and exposure to term contract obligations.

“Northern refineries benefit from domestic crude supply and Russian pipeline inflows, whereas southern plants are significantly more exposed to seaborne disruptions,” said Emma Li, lead China market analyst at Vortexa.

Some refiners have brought forward maintenance ahead of possible shortages, she said. Others are managing their operations to preserve feedstock.

Several plants across provinces, including Zhejiang, Hebei and Fujian, as well as in cities such as Zibo, Zhanjiang, Qingdao and Nanjing, have cut run rates by a median of eight percentage points since the war began, according to consultancy Mysteel OilChem. BLOOMBERG