Crude diplomacy casts shadow over Trump-Xi summit

China has quietly amassed the world’s largest stockpile of crude oil.

That is no imply feat for a rustic that can also be the globe’s largest importer of vitality.

It brings a recent dynamic to Beijing’s relations with the USA, as Premier Xi Jinping prepares to host President Donald Trump for a high-stakes state go to on Could 14 and 15.

There may be already controversy. China’s Commerce Ministry banned Chinese language corporations from complying with U.S. sanctions on small refineries that buy Iranian crude. The so-called “teapot refineries” have been inspired by Chinese language authorities to import Iranian oil as a result of they’re seen as proof against international sanctions, in keeping with Teneo. The analysis home warns that China’s non-compliance with the sanctions might immediate Washington to launch a second spherical of restrictions to clamp down on the Sino-Iranian commerce.

Oil markets are now not coping with a circulation disruption, however with a quickly compounding inventory shock, in keeping with Kpler. The analytics group says that the majority Center East cargoes loaded earlier than the struggle have now been discharged, that means the stock drawdown will speed up and native refining will gradual.

The U.S. Power Data Administration (EIA) estimates that China added a median of 1.1 million barrels per day of crude oil to strategic reserves in 2025, with “preliminary authorities information indicating that China has continued to construct inventories in 2026” forward of the Iran battle.

Which means that authorities and business oil stockpiles in China averaged round 360 million barrels in December 2025, which compares to America’s strategic reserves of almost 414 million barrels over the identical interval.

China’s crude shopping for binge has helped to stop even greater spikes in oil costs amid the Strait of Hormuz impasse. It has additionally offered a lifeline to Asian importers which were most instantly impacted by the halt in Center East vitality deliveries.

For China, heightened tensions with the U.S. and sanctions-related disruption imply strategic petroleum reserves are performing as a hedge towards provide constraints, value volatility and forex volatility, in keeping with the Oxford Power Institute.

The struggle in Iran is anticipated to dominate the assembly between President Trump and Premier Xi Jinping, doubtlessly at the price of different agenda gadgets like tariffs, uncommon earths and AI. Beijing’s quiet energy play to construct strategic oil reserves shifts the vitality dynamic between China and the U.S., including one other layer of complexity to this vital assembly.

Monday: EU Overseas Affairs Council assembly

Tuesday: German inflation information, U.S. inflation information

Wednesday: OPEC Month-to-month Oil Market Report, IEA Oil Market Report

Thursday: U.Okay. GDP information, BRICS Overseas Ministers assembly

Friday: Credit standing evaluations: Germany, Italy and Ukraine