China Redefines Strategic Reserves to Stabilize Global Oil Markets

Recently, China adopted a new approach in managing its strategic oil reserves. Instead of boosting imports and inflating global prices, the country chose to restrict shipments and rely on accumulated stockpiles. This decision came at a crucial time when the closure of the Strait of Hormuz posed significant pressure on the global oil market. Despite initial concerns about the disruption of vital maritime routes for crude oil, international prices did not react as expected. Brent Crude, the international benchmark, stabilized around US$ 85-90, compared to its early-year levels near US$ 60. This scenario contrasts with previous crises, such as the 1973 Arab oil embargo that quadrupled prices and affected only 7% of global supply. Reduced demand in Asian markets, including China, contributed significantly to this stability. With strategic reserves estimated at over 1.2 billion barrels and capable of lasting a minimum of one year, China's approach underscores the growing importance of controlling petroleum stocks as a geopolitical and economic tool. Source: Middle East Eye