China Cushioned the Hormuz Shock with 1,400 Million Barrels in Reserves

China entered the Strait of Hormuz crisis with strategic crude oil reserves totaling 1,400 million barrels as of December 2025, compared with the 413 million held by the United States Strategic Petroleum Reserve, according to the Energy Information Administration (EIA). That position allowed Beijing to cut imports and draw down inventories to absorb the de facto closure of the strait in March 2026, keeping prices below the peaks the market had anticipated.

Beijing's response was top-down, according to analysis by Latitude Media: it cut crude imports and used its inventories to defer demand, backed by a decade of investment in electric vehicles, high-speed rail, and coal-to-liquids conversion plants. At the same time, the United States and the rest of the International Energy Agency agreed in March to a coordinated reserve release, a model that analyst James Gutman of Abaxx Technologies compares to central banking and which, he argues, worked for only a limited time. The dual intervention explains why barrel prices did not spike, and its effect extended to the reference prices paid by crude buyers in Latin America.

The EIA, which expanded its estimate to include China's commercial inventories, calculates that Beijing added an average of 1.1 million barrels per day to its reserves during 2025. Of that total, approximately 360 million correspond to government inventories and nearly 1,000 million to commercial inventories. Japan held 263 million and OECD Europe, 179 million. Gutman notes that China is re-entering the market from a position of strength and suggests that both instruments will be redeployed in critical minerals and equipment manufacturing.

What to watch next is how China re-enters the market as a buyer and how the two intervention playbooks are reused if the disruption persists. The EIA said it will periodically update its assessment of strategic inventories in its short-term outlook, a concrete reference to monitor to gauge how much buffer each country retains.

This article was produced with artificial intelligence assistance from verified sources and reviewed by a human editor before publication.