For half a century, the global oil market has revolved around two centres of power: the Gulf, led by Saudi Arabia, which controlled spare production capacity, and the United States, which supplied military protection and financial muscle to Gulf oil. Together, Washington and the Gulf states could influence how much oil reached the market, in which currency it was traded and, ultimately, what consumers paid. That architecture is no longer as secure as it once appeared.
A third centre of power is now emerging — not primarily as an oil producer, but as the world's biggest buyer and stockholder. According to a new study by the RAND Corporation, China has accumulated as much as 1.4 billion barrels in strategic and enterprise-controlled inventories. That figure is more than three times the roughly 413 million barrels held in the US government's Strategic Petroleum Reserve.
Beijing's stocks are estimated to cover between 110 and 140 days of net imports. China therefore possesses something no other major oil importer has had at this scale: the ability to alternate between being an enormous buyer, an absent buyer, and a potentially enormous seller. In an increasingly fragmented market, those shifts can determine the direction of prices almost as powerfully as production decisions in Riyadh or Washington.
China plays a significant role in global crude trade, accounting for around 20% of global crude, with import volumes touching 12 million barrels per day — more than twice what India imports. A decision to add or withdraw even one million barrels a day is significant in a market where relatively small mismatches between supply and demand can produce disproportionate price movements. Beijing does not need to release its entire reserve.
Simply changing the speed at which it buys oil can alter traders' expectations. Analysts widely point to China's behaviour during the recent Middle East crisis as evidence of this dynamic. China consciously chose to reduce its oil imports, helping ease supply constraints on global crude demand.
Analysts widely see China's decision as a major factor that kept oil prices from spiralling out of control. China drew down part of its strategic oil reserve and tightened export controls rather than letting domestic and global prices spiral. Unlike the International Energy Agency's transparent 400-million-barrel coordinated release, China's reserve management is largely opaque, commercially driven and rarely disclosed, according to Praveen Rai, Director at Grant Thornton Bharat.
This gives Beijing greater flexibility and growing influence over global oil market dynamics. Manas Majumdar, Partner and Leader for Oil and Gas, Fuels and Resources at PwC India, describes this as significant leverage which he terms price-making power or 'prime purchasing power', distinct from OPEC's pricing power which comes from its supply hold. Over the last decade, China's consumption has grown from around 11 million barrels per day with imports of around 6 million barrels per day, to total consumption of around 17 million barrels per day with imports nearly doubling to almost 12 million barrels per day.
This evolution has transitioned China from a simple consumer to a key market maker — in effect, a global swing buyer. "China's massive strategic oil reserves help it act as a global swing buyer. During price dips, China aggressively stockpiles excess supply — it added 1.1 million barrels per day to reserves last year alone.
This reserve in effect puts a structural floor for global prices," Majumdar told the Times of India. "During price rallies, it can draw down reserves to suppress import demand, directly muting global price spikes, which is what has happened in the current Hormuz crisis," he added. China has built much of its inventory by exploiting divisions in the international system.
The RAND report estimates that around 22% of China's reported crude imports in 2025 involved sanctioned oil, including Iranian and Venezuelan barrels that may have been rerouted through countries such as Malaysia. The Middle East accounted for about 41% of Chinese imports, while Russia supplied around 18%. This diversified buying strategy reduces the ability of Washington to dictate flows through sanctions.
It also gives Beijing negotiating leverage over exporters. When China is one of the few buyers capable of absorbing large quantities of restricted crude, it can demand discounts, favourable payment arrangements and greater use of the yuan. Over time, China could go further — supplying refined products or reserve oil to countries facing shortages, offering preferential prices to strategic partners, or supporting oil transactions denominated in yuan.
RAND describes such "strategic energy diplomacy" as plausible, particularly in Asia and the Global South. India faces particular vulnerabilities in this shifting landscape. The country is one of the world's largest crude importers, depending on overseas supplies for roughly nine-tenths of its requirements.
Yet the RAND comparison places India's strategic inventory at only about 21.4 million barrels — just a fraction of China's stockpile. The immediate risk for India is price volatility. If China begins filling its reserves aggressively during a period of weak prices, it could lift crude costs just when Indian refiners expect relief.
"Every $10 per barrel surge in crude inflates India's annual import bill by $13 to $15 billion, so if China resorts to crisis buying, then it could quickly become India's inflation tax," said Majumdar. Higher crude prices feed into India through several channels: the import bill rises, the current-account deficit comes under pressure, the rupee weakens and the cost of transport, aviation, fertilisers and petrochemicals increases. There is also a strategic disadvantage: China can use low-price periods to accumulate security, while India largely uses them to reduce its import bill.
China's ability to buy sanctioned Russian and Iranian crude also creates competition for India. If Beijing increases purchases, the discounts available to Indian refiners could narrow. If it reduces purchases suddenly, prices for those grades may fall, but Indian companies could face intensified Western scrutiny for absorbing the surplus.
Experts consulted by the Times of India outlined a multi-pronged response strategy for New Delhi. Rajnish Gupta, Partner at EY India's Tax and Economic Policy Group, said India's existing strategy of building up strategic reserves, accelerating its energy transition, expanding nuclear power capacity and pushing exploration and production initiatives is the right one. "Expanding strategic reserves provides immediate resilience; accelerating energy transition and usage of domestic resources reduces import dependence over the long run; and E&P initiatives can help increase domestic output," he said.
PwC's Majumdar argued that India's energy security plans do not need a rethink as much as they need recommitment. The steps India has taken around supply source diversification, strategic reserve expansion and broader energy substitution are sound — they just need to be accelerated. Praveen Rai of Grant Thornton Bharat said India should also reduce the oil intensity of its economy through greater energy efficiency and transport electrification.
"As global oil markets become increasingly influenced by Asian demand growth and geopolitical uncertainties, a diversified and resilient energy portfolio will be critical to reducing exposure to supply disruptions, price volatility, and external market shocks," he told the Times of India. Analysts also stress the importance of intelligence-gathering on Chinese market behaviour. Policymakers must track Chinese refinery runs, tanker movements, storage construction and import patterns as closely as they monitor OPEC+ meetings.
The most consequential oil-market signal may no longer come from a Saudi minister's statement or a US sanctions announcement — it may come from an unexplained rise in tankers heading towards Chinese ports. China cannot unilaterally set the world oil price. Producers still control supply, the Gulf still holds vital spare capacity, and the US remains the largest oil producer and the dominant financial power.
But Beijing increasingly controls the marginal barrel of demand — whether it is purchased, stored, released or withheld. For India, preparing for that shift is no longer optional. Source: Times of India, report by Smriti Jain, August 10, 2026, based on RAND Corporation research and expert commentary from PwC India, Grant Thornton Bharat and EY India.
Source: timesofindia.indiatimes.com