The conventional wisdom on the crude oil markets is that producers like OPEC+ largely control the price of crude oil by changing 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 of the world to set an effective floor and ceiling for prices by increasing or decreasing how much crude was sent into storage tanks.

Prices were stabilized by the production cuts by OPEC+ in 2022. OPEC+ is a grouping of the Organization of Petroleum Exporting Countries (OPEC) and its allies, led by Russia. These?gains? faded once the organization began to reverse its 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 for exports of refined products.

China does not reveal the volume of crude oil flowing in or out of strategic and commercial stocks, but one can estimate it by subtracting the refinery output from the total crude produced domestically and imported.

Not all the excess crude oil was likely added to storage. Some of it may have been processed in plants that were not included in the official data.

The surplus crude for the first 11 month of 2025 was about 980,000 barrels a day (bpd), given 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 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 surplus crude fell to 570,000 barrels per day after reaching 1.10 million in August.

Cargoes that arrive in September were arranged largely during the conflict between Israel and Iran in June when crude prices rose. Brent futures, the global benchmark, reached a six-month peak of $81.40 per barrel on June 23, a spike that was unprecedented.

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

Can China absorb the oil GLUT?

One could argue that China's storage flow is the primary reason why crude prices were locked into 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 amount of crude oil that China has already stored varies, ranging 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 likely commercial inventories. This 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 additional?storage in China. They will add at least 169 millions 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 increase strategic stockpiles at this rate, a large part of the surplus supply forecast for 2026 would simply be used to buy 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 likely continue to increase its inventories into 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)