Oil and gas rally as China hoards record crude in Hormuz crisis
Strategic stockpiling reaches 1.32 billion barrels as Strait of Hormuz disruption fuels global supply fears
China has accelerated crude oil imports to a record 11.5 million barrels per day in the first two months of 2026, stockpiling the equivalent of four months of seaborne supplies as the near-complete closure of the Strait of Hormuz disrupts global energy markets.
The surge represents an increase of approximately 900,000 barrels per day compared with 2025 averages, bringing combined January-February imports to 96.93 million metric tons—a 15.8% jump from the previous year, according to customs data. Onshore inventories have swelled to a record 1.32 billion barrels as of March 5, with state-controlled facilities holding roughly 900 million barrels.
The stockpiling drive comes as the strategic waterway, which handles about 20% of global oil supplies, faces effective shutdown due to conflict in the Middle East. The disruption has triggered force majeure declarations across Asian refining operations, including Wanhua Chemical, which halted Middle East customer deliveries on March 7 citing shipping safety risks.
Brent crude prices have swung dramatically in response to the crisis, surging above $116 per barrel on March 9 before retreating to $94.36 the following day after President Donald Trump signaled potential de-escalation of the Iran conflict. The spike marks a 36% increase over the past month, with prices up more than 35% year-over-year.
China's strategic response includes exploring alternative supply routes, with state-run refiners considering a resumption of US crude imports after a nine-month suspension that began in June 2025 due to trade tensions. Shipping data indicates approximately eight cargoes from the US Gulf Coast are scheduled for delivery, with one vessel already loaded on March 7, according to Platts. Beijing may temporarily exempt the 20% tariff on US crude should the Middle East supply crisis persist as a national emergency.
The energy disruption has created mixed performance across oil-related equities. While major producers like Equinor and North American integrated majors have attracted investor interest amid higher prices, Asian refiners have faced pressure. Indian Oil, Hindustan Petroleum, and Bharat Petroleum all declined as surging Brent prices threatened near-term margins, while Reliance Industries also posted losses.
Energy analysts emphasize that China's massive reserve expansion—equivalent to roughly four months of its seaborne import requirements—provides substantial buffer capacity. The country has expanded storage facilities by at least 169 million barrels across 11 new locations in 2025-2026, enhancing its ability to influence global oil pricing dynamics through its dual-layer system of government-controlled and commercial storage.
Looking ahead, market participants are watching for signals on the duration of Hormuz disruptions and whether other major importers follow China's lead in diversifying supply sources. Any prolonged closure would continue supporting elevated crude prices, benefiting upstream producers while pressuring downstream margins globally.