China caught the oil industry by surprise during the Iran war, pulling powerful levers to shield itself from the biggest energy shock in decades. In the process, it established itself as a new force in global energy markets – an independent, opaque, massive power. The measures China used to offset the energy supply shock — sharply cutting crude imports, restricting exports of refined fuels and drawing on domestic inventories — culminated in a decades-long campaign to reduce its heavy dependence on overseas energy supplies. This offers a glimpse into how future crises could play out. Given the lack of transparency surounding many of Beijing’s policy choices, China’s assertive strategy points to a future in which energy market blind spots may matter more than visible data.
And it also suggests that we could be entering an era in which China’s energy dynamics are a weapon – both defensive and offensive – not a vulnerability.
DIAL UP, DIAL DOWN
China has been insulated from much of the extreme price volatility that followed the outbreak of war in Iran on February 28. After the effective closure of the Strait of Hormuz – through which 20% of global energy supplies previously transited – Brent crude surged from around $72 a barrel to a peak of $118 in late March before retreating to pre-war levels by early July. The global benchmark has risen again in recent days as U.S.-Iran strikes picked up. But as prices rose, Beijing stopped buying. June deliveries plunged more than 41% from a year earlier to 7.12 million barrels per day (bpd), the lowest level since October 2016, extending a sharp decline recorded in May, customs data showed. The scale of the slowdown, which caught many traders and analysts off guard, turned out to be a critical factor that allowed the global economy to absorb the loss of over 13 million bpd of Middle Eastern exports.
The shift was especially striking given China’s importance to world oil markets. The country imported a record 11.55 million bpd in 2025, roughly two-thirds of its total consumption and 16% of global demand. That dependence would once have made China highly vulnerable to Gulf supply disruptions. Instead, Beijing entered the crisis well prepared. China’s 4.4% increase in crude imports last year was driven in large part by an aggressive stockpiling campaign that left it with an estimated 1.3 billion to 1.5 billion barrels in storage, equivalent to more than 100 days of average imports. But cutting imports was only part of the strategy. In March, China also suspended exports of refined products, including gasoline, diesel and jet fuel, in order to ensure its domestic market was well supplied. The controversial move worried Asian countries, including Australia, Bangladesh and the Philippines, which were already grappling with acute fuel shortages.
To put that number into context, Beijing exported around 800,000 bpd of fuels in 2025, or roughly 12% of Asian refined fuel imports. The government partially eased the restrictions in July, relieving Asia’s fuel market. Yet the episode demonstrated how quickly Beijing can tighten supplies if conditions deteriorate again.
OIL FORTRESS MENTALITY
What may be China’s most powerful line of defence — its enormous oil stockpile — has been deployed only sparingly so far, suggesting Beijing still has significant dry powder.
Beijing provides no official data on inventory levels or movements, leaving traders and policymakers to piece together the picture through indirect indicators. Reuters calculations, based on crude imports and domestic production minus refinery throughput, suggest inventories fell between April and June by a relatively modest rate of 500,000 to 1 million bpd. Inventory draws were limited because Beijing chose to reduce refining activity instead. June throughput was down 18% from a year earlier at around 12.5 million bpd, the lowest level since the height of the COVID-19 pandemic in March 2020. China’s ability to release inventories on a much larger scale therefore remains largely untested. But the Hormuz crisis demonstrated that Beijing possesses a tool capable of materially reshaping global oil balances. At the same time, Beijing has steadily reduced its reliance on oil imports by boosting domestic production, which reached a record 4.3 million bpd last year. The rapid expansion of electric vehicles is further tempering demand growth, reducing the strategic importance of crude.
Taken together, these trends suggest a profound change in China’s role in the global energy system.
PRICE TAKER TO PRICE MAKER
For decades, China was viewed primarily as the world’s largest source of incremental oil demand — a price taker whose consumption largely responded to global conditions. The Iran crisis showed it can also influence those conditions. Its ability to rapidly dial imports and exports up or down effectively transforms China into a price maker, a role traditionally associated with major producers such as OPEC members, Russia and, more recently, the U.S.
The implications extend far beyond oil.
By demonstrating that it can weather a major supply shock while reshaping regional and global fuel flows, China has signalled that it is far less beholden to international energy markets. That marks a dramatic break from the era of deep energy interdependence that defined the past two decades. While this resilience is clearly advantageous for Beijing, a less interdependent energy relationship also creates new frictions. As China becomes more capable of insulating itself from global shocks and influencing market balances on its own terms, tensions with the U.S. and other major consumers could increase. In that sense, the greatest consequence of the Iran war may not be the disruption it has caused, but the revelation that China now possesses the tools to manage such shocks largely on its own. That could reshape not only the global oil market, but the global balance of power.
(The opinions expressed here are those of Ron Bousso, a columnist for Reuters.)
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(Ron Bousso Editing by Marguerita Choy)