China allows state oil firms to tap commercial reserves as Middle East war drags
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Beijing allows state refiners to tap commercial reserves of oil, which are separate from the country's strategic petroleum reserve.
PHOTO: REUTERS
BEIJING – The Chinese government has given state refiners the green light to tap commercial reserves of oil, according to people familiar with the matter, as a six-week war in the Middle East creates a global energy crunch.
Refiners including China Petrochemical Corporation, known as Sinopec, and China National Petroleum Corporation will be able to tap commercial inventories held at processing plants or in storage facilities, the people said, asking not to be named as the discussions are not public.
While it is not specified how much refiners would take, analysts at Energy Aspects said China could allow the use of around 1 million barrels per day (bpd) from April 2026 to June 2026, without providing details on the figure.
Energy consultancy FGE NexantECA has estimated a drawdown in commercial and operational stockpiles amounting to as much as 1 million bpd just in April. China imports crude at a pace of 11 million bpd.
These commercial volumes are part of a vast and multi-tiered system of stockpiles, which exists to help China manage periods of supply disruption. They are, however, separate from the country’s strategic petroleum reserve, which remains untouched.
China, the world’s top oil importer, has built up an estimated 1.4 billion barrels of reserves overall with months of aggressive stockpiling – an emergency resource to be tapped if disruption in the Persian Gulf continues to upend the global oil trade and pushes the world to reach for more of its reserves.
Members of the International Energy Agency had agreed in March to release a record 400 million barrels.
Geospatial analytics company Kayrros reckoned in March that China’s above-ground commercial inventories were at 851 million barrels, and its strategic stockpiles were 413 million barrels. The country also has an estimated 130 million barrels of underground storage capacity, according to Columbia University’s Center on Global Energy Policy.
China sees energy as a key point of vulnerability and has long prepared for the risk of supply disruption. Since the current crisis began, it has curbed oil product exports and ordered refiners to keep fuel production high at all costs.
The National Development and Reform Commission, which is tasked with economic policy, and the National Food and Strategic Reserves Administration did not respond to requests for comment. BLOOMBERG
