China accumulated record oil reserves amid threat of disruptions from Iran
Kyiv • UNN
China reached record crude oil reserves of 1.18 billion barrels to protect against disruptions from the Middle East. This allows refineries to maneuver in conditions of potential disruptions in oil supply, particularly from Iran.
China has record crude oil volumes, creating a safety buffer in case of supply disruptions from the Middle East. This was reported by UNN with reference to Bloomberg.
Details
According to analytical company Kayrros, total onshore crude oil inventories in China reached a record high of 1 billion 18 million barrels. Part of these volumes was provided by new tanks and refining capacities in Shandong province. According to Antoine Halff, co-founder and chief analyst at Kayrros, Shandong alone provides 355 million barrels – a record for the region.
Such reserves, as well as falling demand and low refining margins, give Chinese refineries room to maneuver in the face of potential disruptions.
According to Mysteel OilChem, the refining rate at independent enterprises – the so-called "teapots" – is currently about 45%, the lowest in the last three months.
With high stock levels, Chinese "teapots" will not rush to find alternative sources of Iranian crude oil if supplies are interrupted. Ultimately, if Chinese "teapots" permanently lose Iranian crude oil, we don't think they will replace all Iranian barrels with benchmark-tied grades, as some of them will be forced to cut volumes.
Additionally
Last week, oil prices fluctuated due to an Israeli attack on Iran as part of efforts to dismantle its nuclear program.
The US is currently weighing whether to join the military operation https://unn.ua/news/tramp-pokladaietsia-na-vuzke-kolo-radnykiv-pid-chas-obdumovlennia-udariv-po-iranu-zmi. This increased fears of possible attacks on oil transportation infrastructure, tankers, or strategic checkpoints, which could limit supplies from the Persian Gulf region.
Additionally
China remains the world's largest importer of crude oil. The majority of sanctioned Iranian oil is supplied to China. Beijing expresses concern about the risk of escalation of the conflict, and Chinese Foreign Minister Wang Yi called on Iran and Israel to refrain from further escalation.
According to OilX, Chinese inventory levels exceed seasonal norms. In June, reservoir levels in Shandong were approximately 10% higher than in the same period of 2024.
Traders reported that discounts on Iranian light crude for July delivery remain at $2–3 per barrel relative to Brent. Alternative grades, particularly Russian ESPO, are not yet in high demand. Offers with deeper discounts appeared, but no deals were concluded. FGE also reported in a note on June 18 about isolated cases of cancelled deals for Iranian oil.