China is building out its oil reserves at full speed after the war in Ukraine exposed just how risky it is to rely too much on foreign fuel. According to Reuters, the government ramped up its storage campaign after Russia’s invasion in 2022 shook up global supply chains and made oil prices unpredictable. Now in 2025, the pace is only picking up. Big state oil companies like Sinopec and CNOOC are working on adding storage space for 169 million barrels of crude across 11 separate sites. This is supposed to happen between now and the end of 2026. Out of that total, 37 million barrels’ worth of tanks are already done. Once everything is completed, the new storage network could hold two weeks’ worth of China’s oil imports. That’s not a small number, considering China buys more oil than any other country on earth. The goal is simple: stop depending on the sea lanes and foreign tankers to keep energy flowing. And while most countries are trimming back on imports or hoping for price drops, China is buying more barrels than ever to fill up those tanks. China issues orders to expand storage and buy 140M barrels By July 2025, S&P Global Commodity Insight estimated that China was stockpiling about 530,000 barrels every day. That’s a massive haul, and it’s helping take some of the extra oil off the global market just as OPEC+ slowly unwinds its production cuts . Traders think China will keep buying at this pace through at least March 2026, helped by prices that have been sitting under $70 per barrel for months. The country still leans heavily on imported oil, most of it hauled in by tankers, which is a clear vulnerability. Beijing is trying to close that gap through more storage, more domestic oil, and fewer single-source dependencies. It’s also cutting gasoline and diesel use as more people switch to electric vehicles. Analysts expect total oil demand in China to peak by 2027. The new reserve facilities expected in 2025 and 2026 are almost equal to what was added in the last five years combined, according to analysts at Vortexa and Kpler. Mandates started going out late last year. Beijing quietly told state-owned companies to start buying big. London-based research firm Energy Aspects said one of those orders called for 140 million barrels to be bought and delivered to strategic reserves by March 2026. “China’s stockbuilding strategy has always been to have sufficient energy security for the nation that is highly dependent on crude imports,” said June Goh, a Singapore-based analyst at Sparta Commodities. “The agenda has become more urgent this year with heightened geopolitical risks surrounding Russia and Iran,” she added. China is the biggest oil customer for both countries. China merges commercial and government storage under new law Not all the storage is traditional. Some of it falls under a newer setup called “commercial reserves.” These are technically meant for business use but still work like emergency backup when needed. They’re overseen by the national reserve bureau, which gives refiners flexibility to move oil around. The old government reserves, built before 2019, are still there. But a new law passed in January merged both categories. Now every barrel counts as part of the national reserve system, and companies must hold extra fuel under something called “social responsibility” rules. Everything is managed by special units inside state-owned oil firms. Those teams report to the National Food and Strategic Reserves Administration, which officially owns the barrels. Two separate sites in inland Shaanxi province are being built now, with a combined capacity of 11 million barrels. Provincial officials described them as part of the state’s energy stockpile. A separate 20-million-barrel site on Hainan Island, being built by Sinopec, is listed as both commercial and national in function. That means it’s helping meet Beijing’s target. Meanwhile, in the U.S., things are going the opposite way. When Donald Trump started his second term in January, he said America would “drill, baby, drill.” But nine months in, all he’s gotten is cheaper gas. U.S. oil production is falling. Data from the Federal Reserve Bank of Dallas showed the sector shrank for a second straight quarter through Q3. Brent crude is down 15.8% this year. West Texas Intermediate has dropped 16.8%. The U.S. Energy Information Administration sees output falling another 1% in 2026. Natural gas isn’t expected to change much. The smartest crypto minds already read our newsletter. Want in? Join them .
