China's Strategic Oil Reserve Cushioned the Hormuz Shock as the US SPR Hit a 1983 Low
Beijing's 1.4-billion-barrel stockpile dwarfed US and Japanese holdings, helping explain why oil prices stayed below worst-case forecasts despite the Hormuz closure.
China's strategic oil stockpile — estimated at between 1.4 and 1.5 billion barrels when the war with Iran disrupted Hormuz transit — insulated Beijing from the worst of the supply shock in ways the United States and Japan, with far shallower reserves, could not match, according to reporting published August 10 (2026-08-10).7
The reserve gap is stark. At the time hostilities broke out, the US Strategic Petroleum Reserve held roughly 413 million barrels and Japan held approximately 263 million. Beijing's stockpile exceeded Washington's by more than three times. Steve H. Hanke, professor of Applied Economics at Johns Hopkins University, put China's holdings at 1.5 billion barrels; Axios reported 1.4 billion by December 2025. The hundred-million-barrel divergence between those two estimates — roughly equivalent to Japan's entire reserve — has not been resolved, and neither figure has been independently verified against a common standard.7
China built that position through 2025 by adding an average of 1.1 million barrels per day to its inventories, Axios reported. The accumulation was visible in trade data. Its full strategic weight became apparent only after the disruption began.7
The disruption was severe. The Hormuz closure cut off transit for roughly 20% of the world's petroleum supply, stranding more than 10 million barrels per day in the Persian Gulf, oilprice.com reported. More than 10% of global crude supply was removed from the market almost simultaneously. ICE Brent crude front-month nonetheless sat at $88.82 per barrel as of August 16 (2026-08-16) — far below the $150 to $200 range that circulated as a plausible scenario in March.7,2,6
The US absorbed the shock from a weaker base. EIA data released on Wednesday June 17 (2026-06-17) showed commercial crude inventories down 8.3 million barrels, with the SPR shedding a further 8.9 million in the same week. Market analysts warned those drawdowns would support prices as the reserve eroded. By that point, oilprice.com reported, the SPR had fallen to its lowest level since 1983.1,2
Washington had already deployed its largest available lever. In March 2026 (2026-03), the United States and other IEA member states agreed to a coordinated emergency release — the biggest in history — of 400 million barrels of strategic stocks. Those barrels must eventually be replaced. Reuters calculations put the demand from new storage expansion plans aired in recent months at around 500 million barrels of crude and fuels. Combined, the implied refill requirement runs close to 900 million barrels before strategic inventories across IEA member states return to pre-shock levels. That demand will materialize over years, and the pace depends on how quickly Hormuz trade normalizes.4,2
China's cushion did not eliminate its exposure. Nearly half of its crude imports typically transit Hormuz, news18 reported. When the strait closed, China's imports from the Middle East fell to just 2 million barrels per day, down from roughly 3 million bpd in May, according to Emma Li, lead China oil market analyst at Vortexa. Beijing was drawing reserves rather than replenishing them in real time.6,3
But China retained flexibility that the US did not. During the ceasefire period, Iran sold nearly $6 billion worth of oil to China, according to August 10 reporting, funds Beijing used in part to replenish whatever strategic volumes it had consumed. The US responded by launching airstrikes on Iran on July 7 (2026-07-07) and suspending a Treasury Department license that had authorized Iranian oil sales for 60 days.7,5
NYMEX WTI front-month stood at $81.47 per barrel as of August 16 (2026-08-16). The pace at which the US SPR is rebuilt, and China's ability to sustain Middle East import volumes while Hormuz transit conditions remain unresolved, are the variables most directly tied to whether current price levels hold into the fourth quarter.1,7