China's Oil Buffer: A Strategic Advantage Amidst Global Disruptions

China has been quietly building up its oil reserves over the years to mitigate potential disruptions in global supplies. This strategy, which began after China became a net importer of oil in 1993, has paid off during the ongoing crisis with Iran. According to customs data cited by a report from Estadão, Chinese oil purchases declined by 23% in the first six months of the conflict compared to the same period last year.

This reduction was made possible by China's substantial stockpiles, which represent approximately one-third of the world's known oil reserves. The country has also invested heavily in refining capacity and alternative energy sources, such as coal and electric vehicles. In fact, electric vehicles accounted for about 14% of passenger cars on the road in China, leading to a reduction in oil consumption by around 1.5 million barrels per day.

The impact on the market has been significant, with analysts from Goldman Sachs estimating that barrel prices would have been about $10 lower if China had continued buying at pre-war levels.