Paper: GS – II, Subject: International Relations, Topic: Global issues, Issue: Implications of China’s oil spree.
Context:
China has been purchasing and stockpiling massive amounts of crude oil—over 150 million barrels in 2025, costing about $10 billion. This has raised concerns in global energy markets about whether the move is driven purely by low prices or deeper strategic motives.
Key Highlights:
Scale of Stockpiling:
- China absorbed 90% of global stockpiling in Q2 2025 (IEA estimate).
- China’s storage capacity has recently expanded, allowing higher imports.
- By 2026, storage could equal 140–180 days of consumption vs. the current capacity of 110 days.
Possible Explanations:
Other factors: As China buys 20% of oil from sanctioned nations such as Russia, Iran, and Venezuela, stockpiling ensures resilience in case US sanctions tighten.
Implications for Global Markets:
- Short-term:
- Ensures global oil prices stability despite oversupply.
- Increased demand prevents prices from falling further.
- Medium-term:
- China’s stockpiling could withdraw once storage limits are reached, depressing demand.
- Long-term:
- Reflects energy nationalism and Beijing’s attempt to hedge against geopolitical vulnerabilities.
- Could impact global oil flows, particularly for sanctioned producers.
Significance for India:
- India, as the world’s third-largest oil importer, faces price volatility due to China’s strategic hoarding.
- China’s stockpiling may tilt supply dynamics, especially for Middle Eastern crude.
- India needs to accelerate Strategic Petroleum Reserve (SPR) capacity, diversify imports, and expand renewable energy push.
Conclusion:
China’s oil spree is not merely about cheap prices but reflects realpolitik, combining economic prudence with strategic foresight. It strengthens Beijing’s energy security, prepares for sanctions risks, and diversifies reserves—ultimately giving China greater leverage in global energy geopolitics.
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