China has been stockpiling oil, and there are several potential explanations; some are worrying, others less so.

Bloomberg’s Javier Blas reports that China has been stockpiling oil. In one respect that’s no surprise. For reasons rooted in both ideology and prudence, China has long been a stockpiler (Russia is, too), but the current level of stockpiling is worth noting.

Blas:

China has purchased more than 150 million barrels — costing about $10 billion at current prices — above its actual use so far this year. For a country that buys more electric vehicles than anywhere else, that demands dissecting.

The stockpiling was exceptionally high during the second quarter, when the International Energy Agency estimates that China absorbed over 90% of the global stockpiling we can measure. That has helped support prices this year, and with the oil market forecast to move into a huge surplus, whether China continues its buying spree — and for how long — is crucial for 2026.

Blas cites various potential explanations; some are worrying, others less so. It could be simple opportunism. Beijing has some good commodity traders in its ranks, and West Texas Intermediate oil is trading in nominal terms at the same levels of 20 years ago. China has plenty of storage space. Interestingly, Blas reports that much of the buying may be due to a new law codifying a strategic storage requirement for private and state-owned companies. What brought that on?

We live in troubled times. Besides, around 20 percent of China’s oil comes from countries subject to U.S. sanctions. What if they were to bite far harder? Blas had recently attended the annual Asia-Pacific Petroleum Conference in Singapore. The talk there had been that China’s stockpile is good for 110 days, but that that could increase to 140 to 180 days in 2026. Speculation, but . . .

Another unsurprising theory was that China was gearing up to do something about Taiwan.

And then there was this:

China may see oil as an alternative to US Treasuries, a way to reduce its exposure to US assets. Putting, say, $10 billion in 2025 in crude, and perhaps as much again in 2026, is a way to diversify its foreign reserves. After all, Beijing is also buying gold and investing in non-dollar assets.