Expanding strategic oil stocks in China support crude oil prices
We estimate crude oil inventories in China increased by about 900,000 barrels per day (b/d) between January and August this year, essentially acting as a source of demand by removing barrels from the global markets. The stock builds in China limited the downward price pressure we would otherwise expect to see with growing inventories, keeping the Brent crude oil spot prices in a relatively tight range around $68 per barrel (b) in the second and third quarters of 2025.
We estimate global petroleum inventories rose by an average of 1.8 million b/d in the second and third quarters in our October Short-Term Energy Outlook (STEO). Global oil inventories have been growing in 2025 as crude oil production from OPEC+ members and non-OPEC+ producers in North and South America has outpaced global demand growth. Between April and August (the latest estimates we have), growth in China alone averaged 1.1 million b/d. Similar levels of global inventory growth would typically put downward pressure on crude oil prices; however, the price of Brent increased slightly during this period, averaging $68/b in the second quarter (2Q25) and $69/b in 3Q25.
We estimate total liquid fuels inventories in non-OECD countries, including China, grew by an average of 0.9 million b/d from January through August 2025. We estimate that on average, 0.9 million b/d of crude oil and condensate was added to oil inventories in China, making up most of our estimated global inventory builds of 1.4 million b/d over the same period.
Note: Estimates derived from China National Bureau of Statistics, Vortexa Analytics, Argus Media, and Global Trade Tracker. 1Q25=first quarter 2025
China does not report data on its oil inventories, so we assessed China’s stock growth based on imports, exports, refining, and oil inventory data from third-party and official sources. We estimate the additions to oil inventories in China by balancing crude oil and condensate production, reported by the China National Bureau of Statistics, along with imports, refinery runs, and export data from a collection of ship-tracking and third-party sources. Depending on the source used and assumptions made, the range between different stock build estimates is 0.5 million b/d on average and can be as large as 1.1 million b/d, so we take an average for this comparison. Although we know some portion of China’s refinery capacity can utilize heavy fuel oil, we assume refinery run numbers are strictly crude oil for our estimates. In addition, since public reports that China directed its National Oil Companies to add barrels of oil to inventories, we assume both commercial and official government storage facilities can be considered as part of their strategic inventory stockpile.
Although our estimates are based on limited information, they support the idea that inventory growth in China was not available for trade on the global market, supporting crude oil prices.
The numerous geopolitical risks, along with shifting global oil trade flows and increased use of shadow tanker fleets due to sanctions, increase the uncertainty around estimating global oil balances in our STEO. Although we estimate global oil inventory builds to accelerate in our STEO, averaging 2.2 million b/d on from the fourth quarter of 2025 through 2026, the portion of this estimate that will show up in visible oil inventories and influence oil prices remains uncertain.
We currently forecast that Brent crude oil prices will fall from an average of $68/b in September to an average of $52/b in the first quarter of 2026, when global oil inventory builds are estimated to be at their peak in our STEO. If China continues to add to oil inventories over the forecast at a rate similar to the 0.9 million b/d from January through August of this year, crude oil prices could remain higher than our forecast. Conversely, a slowdown in China’s oil inventory builds would likely put downward pressure on oil prices as more oil shows up in visible oil inventory data.
Principal contributors: Sean Hill, Jonathan Russo