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Bousso: The oil fortress of China will change the global order.

China surprised the oil industry during the Iran War, using powerful levers in order to protect itself from the "biggest shock" in energy for decades. It established itself as an independent, opaque and massive force on the global energy market. China's?measures to counter the energy supply shock - slashing crude imports, limiting exports of refined petroleum products and drawing from domestic stocks - culminated in decades long campaign to reduce heavy?dependence upon overseas energy supplies. This gives a hint at how future crises could unfold. China's assertive strategy may be a sign of a future where blind spots in the energy market will matter more than data.

It also suggests we may be entering an age in which China’s energy dynamics will become a weapon, both offensive and defensive.

DIAL UP or DIAL DOWN

China was insulated from the price volatility following the war in Iran that began on February 28. Brent crude soared from $72 to $118 a barrel in late March after the Strait of Hormuz was effectively closed. By early July, it had returned to its pre-war level. In recent days, the global benchmark rose again as U.S. - Iran strikes increased. Beijing halted purchases as prices increased. Customs data revealed that June deliveries fell by more than 41% compared to a year ago, reaching 7.12 million barrels a day (bpd), their lowest level since Oct. 2016. This continued a steep decline in May. Customs data showed that the scale of the decline, which surprised many analysts and traders, was a crucial factor in allowing the global economy to absorb a loss of more than 13 million barrels per day of Middle Eastern exports.

This shift was particularly striking, given China's significance to the world oil markets. In 2025, China imported an unprecedented 11,55 million barrels per day (bpd), roughly two thirds of its total oil consumption and 16 percent of the global demand. This dependence could have rendered China vulnerable to disruptions in Gulf supply. Beijing was well-prepared for the crisis. China's 4,4% rise in crude imports was largely due to an aggressive stockpiling program that resulted in an estimated 1.3 to 1.5 billion barrels of crude oil in storage. This is equivalent to over 100 days?of average imports. However, reducing imports was just one part of the strategy. China suspended the export of refined products in March to ensure that its domestic market would be well-supplied. The controversial move concerned 'Asian countries including Australia, Bangladesh, and the Philippines who were already struggling with acute fuel shortages.

Beijing will export around 800,000 barrels per day of fuels by 2025. This is about 12% of Asian refined oil imports. In July, the government eased some of its restrictions to relieve Asia's fuel markets. The episode showed how quickly Beijing could tighten supply if conditions worsened again.

OIL FORTRESS MINDSET What is China's strongest line of defense -- its huge oil stockpile -- was only deployed sparingly, indicating Beijing still has a significant amount of dry powder.

Beijing does not provide official data about inventory levels and movements. Traders and policymakers must rely on indirect indicators to get a picture. Calculations based on crude exports and domestic production less refinery throughput suggest that inventories decreased between April and July by a modest rate of 500 000 to 1 million barrels per day. Beijing reduced refining instead, which limited the inventory draw. The June throughput, at around?12,5 million bpd was 18% lower than a year ago. This is the lowest level seen since March 2020 when the COVID-19 Pandemic peaked. China's capacity to release stocks on a larger scale remains largely untested. The Hormuz Crisis showed that Beijing has a tool to radically alter the global oil balance. Beijing has also steadily decreased its dependence on oil imports, by increasing domestic production. This reached a record of 4.3 million bpd in last year. Electric vehicles are a major factor in reducing demand, and thereby the strategic importance for crude oil.

These trends, taken together, suggest that China's position in the global energy system is changing.

PRICE TAKER TO PRICES MAKER

China was seen as the largest oil consumer in the world for decades. Its consumption was heavily influenced by global conditions. Iran's crisis proved that it could also affect those conditions. China's ability to quickly adjust imports and exports, up or down, effectively transforms it into a price maker. This role is traditionally associated with OPEC, Russia, and more recently the U.S.

Oil is not the only issue.

China's ability to withstand a major shock in fuel supply while reshaping global and regional fuel flows has shown that it is less dependent on international energy markets. This marks a significant break from the deep interdependence of energy that characterized the last two decades. This resilience is a clear advantage for Beijing. However, the less interdependent relationship in energy creates new frictions. Tensions with the U.S., and other major customers could rise as China is able to 'isolate itself from global shocks' and influence market balances in its own way. The greatest impact of the Iran 'war' may not have been the chaos it caused but rather the fact that China has the ability to handle such shocks on its own. This could have a profound impact on the global oil markets, as well as the balance of power in the world.

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(source: Reuters)