This move is part of what dealers describe as China’s concerted effort to build up strategic stockpiles.
The actions of China regarding its hoarding of essential commodities, such as oil, have garnered significant attention in recent times. This has raised questions about whether they are proactive measures in the event that problems arise in the future.
These discussions center on the port of Dongying in eastern China, where a new storage facility capable of holding 31.5 million barrels was completed in late 2018. Since the beginning of 2024, multiple tankers have often been dumping Russian crude oil into this facility at the same time.
This move is part of what dealers describe as China’s concerted effort to build up strategic stockpiles. Depending on the source, China’s Strategic Petroleum Reserves might have anywhere from 280 to 400 million barrels.
It’s interesting to note that the number exceeds the estimated 364 million barrels of strategic petroleum reserves that the US holds. In times of peace, it consumes roughly 14 million barrels of oil every day.
A significant portion of these new arrivals come from Russia, whose energy exports to China reached a record 2.14 million barrels per day last year, an increase of more than 25%.
Beijing now receives more electricity from Russia than Saudi Arabia for the second consecutive year as a result of this rise. China has benefited from a sharp decline in Russian oil prices as a result of the US and Western sanctions put in place following Russia’s invasion of Ukraine in 2022.
An Enormous National Project China appears to be making a bigger national push to significantly increase its inventories of essential raw materials, of which oil hoarding is merely one facet.
As per certain observers, Beijing might be employing this strategy to protect itself against any future confrontations and global penalties, such those that might result from a Chinese takeover of Taiwan.
In a piece for “War on the Rocks,” former US Office of Naval Intelligence chief Mike Studeman asserts that Chinese President Xi Jinping is preparing his country for a potential high-intensity conflict. Strategic stores of resources and requirements are being accumulated, and Chinese society is becoming more militaristic as part of this preparation. In the event of a regional or global crisis, these actions would protect China against military blockades and sanctions similar to those placed on Russia.
China’s stockpiling could lead to price spikes in the world oil market. This might cause concerns about supply shortages, especially if other nations begin hoarding goods at the same pace. The strategic importance of nuclear stocks heightens geopolitical tension, particularly given ties with the West and Taiwan.
Economists and market analysts are assessing the potential effects on global markets, particularly as they pertain to supply chains and energy pricing. China’s stockpiling has alarmed trading partners because it could be an attempt to shield itself from impending military blockades or sanctions.
