China’s Oil Stockpiling Sets Strong Demand Floor in Softening Market
Beijing's accelerated build-up of strategic reserves is absorbing surplus supply, providing key support for prices amid forecasts of a global glut.
China is aggressively expanding its strategic petroleum reserves (SPR), creating a significant and sustained source of demand that is providing a firm floor for global oil prices. The move by the world's largest oil importer to bolster its energy security acts as a critical counterbalance to mounting concerns over a global supply glut and weakening economic growth in other major economies.
Throughout 2025, Beijing's stockpiling has become a dominant factor in the energy market. According to estimates from S&P Global, China is set to absorb an average of 530,000 barrels per day (bpd) for its reserves this year. Some reports suggest the filling rate has been even higher at times, reaching approximately 1 million bpd since March. This initiative is backed by a massive infrastructure build-out, with plans to add nearly 170 million barrels of new storage capacity, signaling a long-term policy of maintaining robust inventories.
This strategic buying is providing a crucial buffer for the market at a time when leading energy authorities are flagging a potential oversupply. The International Energy Agency (IEA) has presented a cautious outlook, forecasting that global oil demand growth will slow to between 700,000 and 740,000 bpd in 2025. In its recent October oil market report, the IEA cited a challenging macroeconomic environment and the accelerating adoption of electric vehicles as key headwinds, projecting that a supply surplus could emerge by mid-2026.
The Organization of the Petroleum Exporting Countries (OPEC) offers a more bullish counterpoint, maintaining a forecast for demand growth of 1.3 million bpd next year. The producer group sees resilient demand from non-OECD countries, particularly China and India, offsetting weakness elsewhere. This divergence highlights the central tension in the market: China's policy-driven demand versus softening consumption in the West.
"China’s SPR fill is the most significant bullish factor that is otherwise not directly tied to immediate consumption," noted one commodities strategist. "It’s effectively removing barrels from the market that would otherwise contribute to the widely expected surplus. It won’t erase the surplus, but it certainly puts a floor under prices."
Beijing’s focus on energy security is the primary driver behind the stockpiling spree. The country aims to hold reserves equivalent to 90 days of net imports, a standard recommendation for IEA member countries, to safeguard against supply chain disruptions and volatile price swings. The sustained purchasing, particularly when prices for Brent crude hover in the $70-$80 per barrel range, suggests a price-sensitive but determined buyer.
For the broader energy sector, China's actions provide a degree of stability, benefiting producers who face the prospect of weaker demand. While the SPR build-up may not be enough to single-handedly ignite a major price rally, it mitigates the downside risk and complicates the calculus for OPEC+ as it considers future production policy. Investors will be closely watching the pace of China's reserve filling alongside global economic indicators to gauge the future direction of the oil market.