China's oil stockpile is the reason your petrol isn't £3 a litre

The Economist has an editorial on China's grip on the global oil market which treats the story as a problem: an autocracy has accumulated enough market power to move prices, conceals its intentions, and might one day use that leverage badly. All true. But the framing quietly skips the more awkward point, which is that the great economic surprise of this year — a major Gulf war that did not produce an oil price catastrophe — is largely a gift from Beijing, and one that Western energy policy did nothing to earn.

What actually stopped the shock

The Strait of Hormuz has been effectively closed for much of 2026, removing something like a tenth of global supply. The textbook response to that is a price spike of a wholly different order to the one we got. Brent went to the low nineties, briefly over $100, and then largely sat there.

Part of that was the coordinated release of 400 million barrels by the International Energy Agency in March, the largest in its history. But the bigger absorber was China, which entered the war holding somewhere between 1.2 and 1.4 billion barrels across commercial and strategic reserves — more than the entire IEA membership combined, including the roughly 400 million barrels in the US Strategic Petroleum Reserve.

Beijing then did the sensible thing and stopped buying. As CNBC reported, the sharp reduction in Chinese crude imports was the single most important factor keeping Brent below $100. A buyer that normally takes a large share of seaborne crude simply stepped out of the queue, and everyone else got to bid against fewer rivals.

This was planning, not luck

The uncomfortable bit for anyone committed to market solutions is that none of this happened by accident. For well over a year before the war, China's crude imports consistently exceeded what its refineries could process. That is not a logistics error. It is deliberate accumulation, funded partly by discounted sanctioned barrels from Russia and Iran, and matched by an enormous programme of tank-building — eleven new storage facilities under construction, adding some 169 million barrels of capacity, on top of the 180 to 190 million barrels added between 2020 and 2024.

Then, in May, China began drawing the reserve down at roughly a million barrels a day, while cutting refinery runs and restricting fuel exports. A state deciding, years in advance, to buy cheap insurance against an event it could not predict but could certainly imagine.

Britain, meanwhile, holds no strategic petroleum reserve of its own worth the name and is still arguing about whether to develop two fields in the North Sea.

The buffer is finite

None of which makes this a permanent arrangement. A drawdown of a million barrels a day covers perhaps a third of what China is no longer importing, and stocks that took years to build can be consumed in months. When Beijing turns round and starts restocking, it will be competing for the same scarce barrels as everyone else, and the price rise deferred through 2026 will arrive with interest.

The Economist's answer — reduce oil consumption so that no autocrat's decisions matter much — is correct and almost entirely beside the point on a five-year view.

Final thoughts

The lesson isn't that China is uniquely menacing. It is that a state willing to spend money on unglamorous physical infrastructure, against a risk that might never materialise, gets to decide what everyone else pays. That was once a British habit too.