Here’s a startling fact: China’s crude oil storage flows took a dramatic nosedive in September, leaving many in the energy sector scratching their heads. But here’s where it gets controversial—while some see this as a mere blip, others argue it’s a strategic move to balance oil volatility. So, what’s really going on?
In September, China’s surplus crude oil dropped to 570,000 barrels per day (bpd), a sharp decline from August’s 1.01 million bpd. This shift was driven by two key factors: lower imports and higher refinery processing. And this is the part most people miss—China’s ability to smooth out oil price volatility by adjusting these levers is a masterclass in energy management.
Imports fell to 11.5 million bpd in September, the lowest since January. Why? Refiners scaled back purchases after prices spiked in June during the brief Israel-Iran conflict. Interestingly, the cargoes arriving in September were likely arranged when crude prices were at a six-month high, with Brent futures hitting $81.40 a barrel on June 23. This timing highlights China’s strategic approach to procurement.
China keeps its strategic and commercial stockpiles under wraps, but we can estimate flows by subtracting processed oil from total imports and domestic output. In September, domestic production was 4.32 million bpd, bringing the total available crude to 15.82 million bpd. Refiners processed 15.25 million bpd, up from August’s 14.94 million bpd, leaving a surplus of 570,000 bpd. Not all of this surplus likely went into storage, as some may have been processed in facilities not tracked by official data.
From March onward, China imported crude at a rate far exceeding domestic demand, building up a surplus. For the first nine months of 2025, the average surplus was 930,000 bpd, dropping to 990,000 bpd by August. This buildup followed a rare draw on inventories in January and February, when processing outpaced available crude by 30,000 bpd—the first such instance since September 2023. This draw occurred as Brent futures peaked at $82.63 a barrel on January 15, up from $70 in early December.
Here’s the million-dollar question: Will China ramp up stockpiling as oil prices continue to fall? Brent crude hit a six-month low of $60.14 a barrel on October 17, trading at $61.12 in Asia on Monday. Such prices could incentivize Chinese refiners to rebuild inventories. However, geopolitical pressures complicate matters. Western efforts to curb Russian oil imports by China and India could force Beijing to diversify its suppliers, though it’s unlikely to halt stockpiling entirely.
Prices will be the deciding factor. If the downtrend persists as OPEC+ ends voluntary production cuts, history suggests Chinese refiners will absorb any surplus. But what do you think? Is China’s strategy a savvy move or a risky gamble? Let’s debate in the comments—your take could spark the next big conversation!
