Key facts
- China's response to the Iran conflict revealed its growing influence over global energy markets.
- Beijing reduced crude oil imports and utilized strategic reserves to shield its economy from supply disruptions.
- The move eased pressure on global oil markets by reducing demand during a period of constrained Middle Eastern exports.
- Brent crude prices surged from $72 to nearly $118 per barrel before retreating.
- China's crude imports fell over 41% in June year-on-year.
- China temporarily restricted refined fuel exports, impacting regional availability.
China's strategic response to the conflict in Iran has highlighted its evolving role in global energy markets, shifting from a passive consumer to an influential energy power. When the conflict disrupted shipping through the Strait of Hormuz on February 28, global energy markets anticipated China would aggressively seek alternative crude supplies. Instead, Beijing significantly reduced its crude oil imports, drawing on years of accumulated strategic reserves estimated at 1.3 to 1.5 billion barrels. This move, combined with reduced refinery activity and tighter control over fuel exports, helped to shield China's economy from the oil shock and eased pressure on global prices.
Brent crude initially surged from approximately $72 per barrel to nearly $118 before gradually retreating as China's lower import demand was absorbed by the market. This strategic maneuver was not improvised, but rather a result of years of preparation focused on energy security. China has expanded its crude oil storage capacity, increased domestic oil production to a record 4.3 million barrels per day, and accelerated electric vehicle adoption. These measures have transformed a potential vulnerability into a source of resilience.
During the crisis, China's crude imports fell sharply, declining more than 41 percent in June from a year earlier to 7.12 million barrels per day, the lowest level since 2016. This reduction was surprising given China's record imports of 11.55 million barrels per day in 2025, representing about 16 percent of global oil demand. While relying on domestic inventories, China still retains significant emergency reserves. Furthermore, temporary restrictions on refined fuel exports, including gasoline, diesel, and jet fuel, ensured stable domestic supplies but created shortages in parts of Asia, affecting countries like Australia, Bangladesh, and the Philippines. Although these restrictions were partially eased in July, the episode demonstrated Beijing's capacity to influence regional energy availability.