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China’s Economy Faces Oil Shocks with Huge Reserves Exceeding One Billion Barrels
China is undergoing a significant test of its long-term energy security strategy following the Iran-linked conflict that has disrupted oil markets and threatened shipping through the Strait of Hormuz, one of the world’s most crucial oil passageways.
American sources disclosed that Beijing has spent years building up vast oil reserves exceeding 1.2 billion barrels, reducing its reliance on oil imports from the Middle East, diversifying its energy sources, and accelerating the transition to electric vehicles. These reserves can cover its imports for up to around 100 days, providing a considerable buffer against supply disruptions, according to Michelle Mielan, a researcher at the Oxford Institute for Energy Studies.
China has also bolstered its domestic oil production, expanded the use of electric vehicles, and established energy partnerships with Russia to reduce its relative dependence on the Middle East. Customs data shows that crude oil imports rose by approximately 16 percent during the first two months of 2026, reflecting Beijing’s continued efforts to build its strategic stockpile ahead of escalating tensions.
Despite these measures, China remains vulnerable to the impacts of the crisis, as ongoing disruptions in the Strait of Hormuz could lead to increased energy costs and heightened pressure on the economy, particularly in the industrial and petrochemical sectors.
China’s policy falls under a comprehensive strategy led by President Xi Jinping aimed at enhancing self-reliance and reducing exposure to external shocks, which encompasses domestic production in energy, technology, and agriculture. China relies on a mix of local sources, including vast coal reserves, solar panel production, and wind turbine generation, interconnected through the largest power system in the world.
While the rapid shift towards electric vehicles continues, experts predict that Chinese demand for oil will peak in the next few years before stabilizing, indicating that reliance on Middle Eastern supplies will persist for some time.
Geopolitically, the crisis may prompt China to strengthen its ties with Iran and Russia as key energy suppliers, including projects like the “Power of Siberia 2” gas pipeline. Experts believe that recent events will reinforce the Chinese leadership’s conviction on the need to persist with a self-reliance strategy, accelerating efforts to enhance energy security and reduce exposure to international shocks.
