China Pushes Domestic Oil Production as Reserves Fall 162M Barrels

China is urging its state-backed oil and gas giants to boost domestic production and explore new reserves as an ongoing Middle East conflict exposes the nation's dependence on imported energy, according to Crude Oil Prices Today | OilPrice.com. Beijing has drawn heavily on its massive crude inventories, with stockpiles falling by 162 million barrels since May.

Inventory Drawdowns and Supply Pressures

When the Iran war began in February, China held an estimated 1.3 billion to 1.4 billion barrels of crude in commercial and strategic reserves. These stockpiles allowed Chinese refiners to reduce imports when Brent crude surged above $100 per barrel. In June alone, China's crude imports fell by an estimated 4.4 million barrels per day compared to the 2025 average.

However, inventories are finite. Data from EA Crude Oil Inventories put Chinese onshore crude stocks at approximately 1.192 billion barrels during the week ending October 19. September marked the fourth month out of five that China tapped its reserves to cover a domestic shortfall, leaving refiners processing 13.99 million barrels per day against domestic production of 4.43 million bpd and imports of 9.03 million bpd.

Strategic Shift to Domestic Output

Following an October 21 meeting, China's National Energy Administration directed PetroChina, Sinopec, and CNOOC to expand production capacity, increase investment, and accelerate national supply bases. Eight months of disruptions to Middle Eastern shipments, soaring freight costs, and the effective disappearance of Iranian crude from the market have increased the urgency for domestic energy security.

At the same time, Iranian floating crude inventories available for delivery to China fell below 1 million barrels by October 5 and were subsequently exhausted following a naval blockade. To diversify imports, China and Russia also agreed on October 21 to support companies expanding oil cooperation, though rising domestic output remains a central focus despite higher extraction costs for deepwater and unconventional resources.

Key facts

• China's crude inventories have fallen by 162 million barrels since May.
• September crude shortfall reached 530,000 bpd, covered by storage withdrawals.
• Chinese onshore crude stocks stood at approximately 1.192 billion barrels as of October 19.
• China produced approximately 216 million metric tons of crude in 2025.