China Taps Strategic Oil Reserves as Iran Conflict Halves Crude Imports

Key Facts

Amid escalating global supply chain disruptions driven by geopolitical conflicts, China has pivoted to a defensive strategy to secure its energy needs. According to analyst reports, China's crude oil imports saw a drastic decline to approximately 6.36 million barrels per day (bpd) in May, down from 11.40 million bpd in February. To compensate for this slump, Beijing has begun drawing down its massive strategic stockpile, estimated at one billion barrels, to maintain domestic refinery operations and offset the loss of international supplies.

This move comes as energy markets face mounting pressure, with the conflict in Iran disrupting key shipping routes and inflating maritime insurance costs. Compared to global peers, Chinese energy giants like PetroChina (0857.HK) and Sinopec (0386.HK) are navigating complex input costs, while U.S. API crude oil stocks showed a decrease of 2.8 million barrels per market data on May 27, 2026. Experts suggest that China’s reliance on domestic inventories may temporarily alleviate global demand pressure in the spot market.

Traders should closely monitor the performance of Chinese energy stocks such as CNOOC (0883.HK), which are sensitive to production and import volatility. As of the close on June 2, 2026, the market remains focused on upcoming economic catalysts that could shift demand sentiment. The pace of China's strategic reserve drawdown will be a critical factor in determining its long-term resilience against supply shocks without resorting to high-priced international purchases.