The conventional wisdom on the crude oil markets is that producers like OPEC+ largely control the price of crude oil by adjusting output levels in order to achieve a desired result.

This shibboleth has been challenged by China in 2025, who used its position as the largest oil importer to set a price floor or ceiling for crude by increasing or decreasing how much it sends to storage tanks.

Prices were stabilized by OPEC+'s production cuts for 2022. OPEC+ is a grouping of the Organization of Petroleum Exporting Countries (OPEC) and its allies, led by Russia. These gains began to fade once it started reversing the?cuts? in April of this year. Faced with a looming glut of oil, OPEC+ decided to hold production steady for the first quarter next year.

China is left to clean up the surplus.

The biggest unknown on the crude market is what China will do in 2026. Beijing's actions will likely influence the strategies of other participants.

China does not release information about its strategic and commercial stockpiles. This makes it difficult to assess both physical flows as well as policies likely to be implemented.

In 2025, it was evident that China bought more crude oil than was needed for its own consumption and exports.

China does not reveal the volumes of crude oil flowing in or out of strategic and commercial stocks, but an estimation can be made if you subtract refinery output from the total amount of crude available through imports and domestic production.

Not all the excess crude is likely to have gone into storage. Some of it may have been processed in plants that are not included in official data.

The surplus crude for the first 11 month of 2025 was about 980,000 barrels/day (bpd), considering that the combined imports and domestic production were 15,80 million bpd. Refinery processing was 14,82 million bpd.

The surplus was built up from March, after refiners drew on their inventories for the first time in January and Feburary when they processed crude at a rate that exceeded available crude by approximately 30,000 bpd.

China adds barrels to its oil reserves when the price is low, but reduces them when the price rises.

In September, the excess crude fell to 570,000 bpd from 1.10 million in August.

Cargo arriving in September was largely arranged during the conflict between Israel and Iran in June when crude prices were high. Brent crude futures reached a six-month peak of $81.40 per barrel on the 23rd June.

China's refiners have resumed purchasing excess crude after prices began to ease in June. In November, they had a surplus 1.88 million barrels per day, the largest since April, and up from 690,000.

Can China absorb the oil gludge?

One could argue that China's storage flow is the primary reason why crude prices were anchored in a relatively narrow range during the second half 2025. Brent was anchored on either side of $65.

The question that will be most important for 2026, is whether China can and will continue to purchase excess crude oil when prices fall, thereby providing a floor.

The estimates vary on?how much crude China has already stored. They range from 1 billion to 1.4 billion.

If you assume that a country needs to have enough imports for 90 days, and China imports around 11 million barrels per day, then 1 billion would be adequate.

At least 700,000,000 barrels of oil are probably?commercial stocks, which would suggest a strategic reserve that is closer to 500,000,000 barrels.

This suggests that Beijing could add another 500,000,000 barrels of oil to its strategic stockpile. However, the timing is not certain.

Sinopec, CNOOC and other state oil companies are building new storage facilities in China. They will add at least 169,000,000 barrels to 11 sites between 2025 and 2026.

If we assume a storage flow between 500,000 and 600,000 barrels per day, that would be around 200 million barrels in a single year.

If Beijing continues to?add strategic inventories at the current rate, then it is likely that a large part of the surplus supply forecast for 2026 will be used by Chinese tanks.

If this happens, it's likely that crude oil prices will enjoy a floor supported by China, but will also have a ceiling, as China will reduce imports if the price rises too much.

There are many "ifs" to be considered, but recent history indicates that China will continue building inventories into 2026 and possibly even 2027.

It is also evident that China is willing to use inventory flow as a price mechanism.

China's crude oil imports by sea, which are around 10 million barrels per day (bpd), are about one-quarter of the total seaborne volume. It is therefore possible that Beijing's policy has become the main factor on the oil market.

Clyde Russell is a columnist at and the views expressed are his.

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(source: Reuters)