(BOE Report) – China continued to build the world’s largest stockpile of crude oil in March even as the rest of the world started to draw on inventories to compensate for the loss of millions of barrels from the effective closure of the Strait of Hormuz.
China, the world’s biggest crude importer, had surplus oil of 1.74 million barrels per day (bpd) in March, according to calculations based on official data.
For the first quarter China’s excess crude was 1.41 million bpd, down from the record high of 2.67 million bpd in December but up from the average of 1.13 million bpd for the whole of 2025.
China does not disclose the volumes of crude flowing into or out of its strategic and commercial stockpiles, but an estimate can be made by deducting the amount of oil processed from the total crude available from imports and domestic output.
It is worth noting that not all the surplus crude was likely to have been added to storage, with some being processed in plants not captured by the official data.
But even allowing for those gaps, it is clear that from March 2025 onwards, China has been importing crude at a far higher rate than necessary to meet domestic fuel demand.
China’s imports of crude oil were 11.77 million bpd in March, while domestic output was 4.49 million bpd.
Refinery processing was 14.52 million bpd, leaving a surplus of 1.74 million bpd available for storage.
The continuing building of China’s crude stockpiles in March came as imports were largely unaffected by the conflict in the Middle East, which started on February 28 when the United States and Israel launched an aerial campaign against Iran.
The oil delivered to China in March would have exited the Strait of Hormuz prior to the conflict’s start, but imports from April onwards are likely to be affected.
This raises the question as to how China responds to lower crude imports from April onwards, which may be further constrained if the U.S. military is successful in executing President Donald Trump’s order to blockade vessels from Iranian ports.
China’s seaborne crude imports in April are estimated by commodity analysts Kpler at 8.7 million bpd, and while this figure is likely to increase as more cargoes are assessed as arriving prior to month end, it’s still likely that arrivals will be the lowest since the 7.97 million bpd in August 2022.
OPTIONS
China can tap some of its vast stockpile of crude oil if it wants to keep domestic refinery processing around current rates.
The exact amount in both commercial and strategic inventories is not disclosed by Beijing, but analyst estimates are that it is at least 1.2 billion barrels.
If China did release up to 2 million bpd from reserves in order to maintain refinery throughput, it would take almost two years for the stockpile to deplete.
This is obviously an extreme situation and the reality is that crude oil flows from the Middle East will at some point return to levels close to what they were prior to the start of the conflict.
This means China could easily maintain refinery processing, and even increase it to allow for exports of fuels, something Beijing has placed informal restrictions on since the start of the conflict.
China exported 1.19 million bpd of refined fuels in March, according to calculations based on official customs data, but this is likely to drop sharply in April, with Kpler tracking shipments of about 524,000 bpd for the month.
The loss of refined fuel exports from China has tightened an already stressed market for products in Asia, with jet fuel and diesel both hitting record high prices during March.
It’s likely that Beijing is expecting the Iran conflict to end in the coming weeks and that the flow of crude and products from the Middle East will resume.
However, if the Strait of Hormuz remains closed for an extended period the risks mount for China.
While it can maintain domestic fuel supplies for an extended period because of its huge crude reserves, if Asian neighbours experience shortages and their economies start to shut down it won’t take long for this to blow back on China’s export-focused industries.
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The views expressed here are those of the author, a columnist for Reuters.
(Editing by Kim Coghill)
