Before the United States attacked Iran, Beijing had quietly spent\nyears and tens of billions of US dollars amassing the world\u2019s largest\noil reserves. Now, with the conflict expected to be prolonged, the\nmassive stockpile has given China significant power over global oil\nmarkets while serving as a critical new defensive shield against Western\nintervention.<\/p>\n
Citing the Wall Street Journal, China\u2019s oil reserves last year were\nestimated to be nearly 600 million barrels larger than those of the\nUnited States. The stockpile allowed Beijing to drastically cut its oil\nimports when war broke out, successfully curbing global oil price spikes\nand securing its own economy from shocks.<\/p>\n
This success serves as a major proving ground for President Xi\nJinping, who continues to fortify his country against the US and its\nallies. For decades, Chinese leaders have been deeply concerned about\nhigh dependence on imported crude oil, much of which transits through\nnarrow straits that could easily be blocked by Western militaries in a\nconflict.<\/p>\n
The Iran crisis has now proven that China\u2019s iron-fisted energy policy\nhas given Beijing a key tool that could be used in the event of a war\nover Taiwan. Researchers from a think tank under the auspices of\nstate-owned China National Petroleum (CNPC) highlighted the importance\nof this energy readiness.<\/p>\n
\u201cAgainst the backdrop of a world entering a new period of turbulence\nand transformation, localised regional conflicts are no longer confined\nto specific locations. China\u2019s energy sector must maintain bottom-line\nthinking and extreme scenario planning,\u201d the researcher stated.<\/p>\n
This oil stockpile, combined with an unexpectedly rapid shift to\nrenewable energy, has successfully made China the most powerful swing\nbuyer in the global energy market. Indeed, China\u2019s crude oil imports\nfell aggressively by 23% in the March to July period compared to the\nprevious year.<\/p>\n
Erica Downs, a scholar at Columbia University\u2019s Center on Global\nEnergy Policy, revealed how confidence flowed within China when the\ncrisis erupted.<\/p>\n
\u201cAlmost from day one there was a feeling that, \u2018We can manage this.\nWe don\u2019t need to panic\u2019,\u201d she said.<\/p>\n
In the future, this power will certainly be used in clashes with the\nUS, such as potential escalation over Taiwan. The majority of China\u2019s\noil imports pass through the Strait of Malacca, which shares the same\nfate as the Strait of Hormuz in the Middle East as a major chokepoint\nthat could be sabotaged by the US.<\/p>\n
Michal Meidan, head of China energy research at the Oxford Institute\nfor Energy Studies, asserted that Beijing\u2019s vulnerability has now\nchanged dramatically.<\/p>\n
\u201cOil is not the Achilles heel we thought it was. I think many people\nassumed China was very, very vulnerable to oil supply disruptions. It\nturns out it is not,\u201d she stressed.<\/p>\n
Although China has never published the exact size of its strategic\nreserves, analysts estimate the total reaches 1 billion to 1.4 billion\nbarrels, equivalent to about 120 days of imports. Starting in 2024,\nChina accelerated its stockpiling to 1.2 million barrels per day,\nutilising a \u201cshadow fleet\u201d to snap up discounted oil from sanctioned\nRussia and Iran.<\/p>\n
The use of these reserves accounts for about half of China\u2019s recent\nimport decline. Other defensive measures include restrictions on oil\nproduct exports, with China\u2019s petrol exports reportedly plunging 93% in\nthe second quarter, diesel exports falling by a quarter, and jet fuel\nhalving.<\/p>\n
On the other hand, China has also been preparing for years by\nexpanding its renewable energy sector, which now accounts for about\ntwo-fifths of total national electricity generation. Additionally, half\nof all new cars sold in China this year are new energy vehicles\n(NEVs).<\/p>\n
This has led to a 2% decline in road traffic while rail mobility rose\n4%. Although the strategy appears flawless, the aggressive approach is\nnot without economic risk. China, which previously relied on imports for\n70% of its crude oil supply, certainly cannot keep suppressing imports\nforever without sacrificing growth.<\/p>\n
Tom Reed, head of oil market analysis at Argus Media, highlighted the\nbitter consequences of the policy for China\u2019s refining business.<\/p>\n
\u201cRestricting exports is indeed a lever China can pull at any time,\nbut it still carries economic costs,\u201d he said.<\/p>\n
This fact was confirmed by Larry Hu, chief China economist at\nMacquarie, who estimated that 90% of the slowdown in China\u2019s industrial\nproduction in the second quarter was closely linked to the oil and\npetrochemical industry chain due to high prices and collapsing\ndemand.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/china-quietly-controls-world-oil-reserves-for-what-purpose-1788007840", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }