China has depended heavily on discounted crude from Iran — up to a fifth of its imported oil at times — and about 4–5% from Venezuela, much of it moved through covert channels to avoid US sanctions. Recent US actions, including redirecting Venezuelan oil to the United States and imposing tariffs on Iran-linked trade, have raised new questions about Beijing’s energy security and its ability to substitute domestic production for disrupted imports.
Domestic production has risen but remains constrained. After President Xi Jinping’s 2019 push to boost exploration and refining under a Seven-Year Action Plan, output climbed from roughly 3.8 million barrels per day in 2018 to about 4.32 million bpd in the most recent year. Gains have come from new wells, fracking and offshore projects, but these largely offset declines at older giant fields such as Daqing and Shengli. Analysts warn that while cumulative growth since 2021 (about 8.9%) is significant, further rapid increases are unlikely because China’s major oil companies—CNPC, Sinopec and CNOOC—are struggling to find sizable new reserves.
Strategic vulnerabilities complicate the picture. Most of China’s imported oil transits the narrow Malacca Strait, a congested chokepoint patrolled by the US Navy and long seen by Beijing as a potential security risk. That geography makes reliance on seaborne imports politically and militarily sensitive.
With domestic output offering limited upside, Beijing has accelerated building emergency stockpiles. Since late 2023 China stepped up filling its strategic petroleum reserves (SPR), spurred by geopolitical tensions after Russia’s invasion of Ukraine and higher global energy prices. Deals with Russia and discounted Iranian crude helped insulate China after 2022–23 supply shocks; covert shipments from Iran — including ship-to-ship transfers and relabeling — reportedly delivered as much as 2 million bpd to China at one point last year.
Stockpiling has expanded further into 2024–25, with new storage sites coming online. Analysts say China’s combined SPR and commercial reserves now cover about 110 days of consumption, above the OECD’s 90-day benchmark, and Beijing has set an internal target of 180 days. Given limited near-term production gains, many expect stockpiles to remain the primary buffer against disrupted imports.
Longer-term resilience rests less on more oil and more on a shift away from oil dependence. Beijing has aggressively pursued electrification and the rapid build-out of renewable energy. Authorities have been steering oil-consuming sectors — transport and heavy industry — toward electricity, upgrading grids and building ultra-high-voltage lines to move power from inland generation hubs to coastal industrial centers.
Electric vehicles now make up well over half of new car sales, and entire city bus fleets in places like Shenzhen and Guangzhou are already electric. The rollout of more than a million EV charging points has helped cap gasoline demand even as the economy grows. China also added more solar capacity in 2024–25 than the rest of the world combined, and wind installations have surged across regions including Inner Mongolia, Xinjiang and coastal provinces. Analysts estimate annual wind and solar capacity growth has averaged over 300 gigawatts in recent years and likely approached 400 gigawatts last year.
Those shifts cannot eliminate the need for imported crude, but they do blunt the impact of possible disruptions from sanctioned suppliers. Policymakers preparing the next five-year plan are expected to continue prioritizing a mix of measures: modest further investment in domestic fossil production where feasible, accelerated filling of strategic reserves, and strong support for electrification and renewable expansion. Combined, those steps aim to reduce vulnerability to sudden supply shocks by substituting electricity for oil in transport, industry and buildings and by bolstering emergency buffers.
Edited by: Rob Mudge