China orders top oil firms to drill more as Iranian crude vanishes
China's National Energy Administration has told PetroChina, Sinopec and CNOOC to expand production and build strategic supply bases after Iranian floating crude stocks sold to China ran dry in October.
The directive followed an October 21 meeting and calls for steady growth in crude output alongside a faster ramp-up in natural gas production. It extends a long-running push by Beijing for energy self-sufficiency, but eight months of Middle East shipping disruptions and the near-total loss of Iranian supply have added urgency.
China entered the crisis holding an estimated 1.3 to 1.4 billion barrels in commercial and strategic reserves, built up during years of favorable prices. That cushion let refiners cut imports sharply when Brent crude climbed above $100 a barrel, with June imports falling by an estimated 4.4 million barrels per day versus the 2025 average.
The buffer is thinning. In September, Chinese refiners processed about 13.99 million barrels per day while domestic output and imports together supplied roughly 530,000 bpd less, a gap analysts say was plugged from storage for the fourth time in five months. Onshore stocks stood near 1.192 billion barrels in the week to October 19 — down 162 million barrels from a May peak but just 13 million barrels below year-ago levels.
Meanwhile, Kpler data show Iran’s floating crude inventories bound for China fell below 1 million barrels by October 5 and have since been used up, a consequence of a US naval blockade. Beijing is turning to Russia instead: the two countries agreed on October 21 to back expanded oil cooperation, though no new volumes were specified, according to Chinese state media.
China produced a record 216 million metric tons of crude in 2025 and gas output topped 260 billion cubic meters, yet September imports still ran more than double domestic production. The new strategy targets deepwater, unconventional and mature-field resources — costlier options that become more attractive when imported oil trades above $100.
Forecasters FGE NexantECA and Energy Aspects now expect China’s fourth-quarter imports near 9.2–9.3 million bpd as prices rise again, after a brief dip below $80 in August allowed heavier October buying.
This matters for oil markets because China’s ability to draw down reserves and throttle imports when prices spike remains one of the few flexible supply cushions left globally; any shift toward domestic output or discounted Russian barrels could ease pressure on Brent crude and WTI crude pricing.
Source: OilPrice.com