How China Helped Keep Oil Prices in Check During Iran War

The global economy narrowly avoided a major price surge when China deliberately reduced oil purchases after the Iran war erupted in February. By stockpiling crude and slowing imports, Beijing successfully kept prices under control, preventing what many had feared would be an economic disaster.

China’s massive strategic reserves – estimated at 1.4 billion barrels by the US Energy Information Administration in December 2025 – have been a crucial factor in keeping oil prices stable. These reserves allow Beijing to tap into them during times of crisis, much like a financial safety net for its economy. As a result, China reduced imports since the war broke out, with crude imports dropping below 8 million barrels a day in May and June.

Oil analysts had predicted that prices would soar to $150 to $200 a barrel due to the supply disruption, but Brent crude prices have instead stabilized around $80 a barrel – albeit briefly before recent hostilities pushed it above $100. The global economy can still breathe a sigh of relief that this hasn’t led to catastrophic price hikes.

However, China’s reliance on stockpiling and reduced imports is not without its limitations. As Beijing begins to show signs of resuming purchases, economists warn that the drag on global growth from elevated oil prices would intensify beyond current estimates. The International Monetary Fund notes that should China resume importing at pre-war levels, it could exacerbate the impact of high oil prices on the economy.

China’s strategy has been to build redundancy in its energy mix by stockpiling crude and promoting clean energy ahead of potential disruptions in global supply chains. This approach has proven effective, but some question whether this model would work as well in more normal economic times. Dan Wang from Eurasia Group notes that China’s reliance on coal – which still supplies around 53% of its energy mix – acted as a crucial shock absorber during the crisis.

The implications of China’s oil buffer extend beyond mere economics. It speaks to a broader pattern of state-led resilience in the face of global uncertainty. By positioning itself for potential disruptions, Beijing has created a model that other nations might find increasingly relevant in an era marked by rising tensions and trade wars. As Daan Struyven from Goldman Sachs warns, oil prices could still reach $120 a barrel as the war continues to disrupt shipping.

China’s experience raises important questions about the relationship between energy security and economic resilience. While its model has worked thus far, it also underscores the need for diversification in global energy markets and a more balanced approach to supply chains. As the Gulf standoff persists, with oil prices forecast to remain elevated through 2027, nations must consider whether they too can learn from China’s experience – or at least, try to replicate its success.