OPEC+ faces pressure to balance surplus and market share

At Asia’s largest oil industry meeting this week, two questions framed the discussion: How much crude is China putting into its strategic petroleum reserve, and how long will that buying continue?

As the world’s largest oil buyer, China’s stockpiling helps meet its needs and keeps global demand strong.

More supply is set to return from OPEC+ and other producers, even as the quick rise of electric vehicles cuts into oil use. Without China’s near-term demand, many traders see a bleak outlook. But at the Asia Pacific Petroleum Conference in Singapore, attendees hit a roadblock, according to Bloomberg.

China keeps its SPR plans secret and long-term, so it’s hard to know how much oil it has or how fast it’s adding. Trackers make estimates, but underground storage hides the real totals.

China has built coastal tanks and rock caverns to keep supplies steady and smooth prices, growing fast over the past 20 years as fuel demand rose. But details are scarce, and some oil comes from sanctioned sellers, Russia, Iran, and Venezuela, adding uncertainty.

Chinese inventories swell by 130 million barrels since March

Antoine Halff, co-founder and chief analyst at geospatial firm Kayrros, estimates that by early September, China’s SPR stood at about 415 million barrels and commercial stocks at about 780 million barrels.

He said the combined total has risen by close to 130 million barrels since late March, putting above-ground capacity use near 60.5% and leaving room for more builds.

Geopolitical tensions have made energy security a top priority for Beijing. China imports over 70% of its oil, so stockpiling crude is crucial. Cheaper prices helped buying, but it’s unclear how much more they’ll add.

“Today, they’re willing to stockpile and willing to increase SPR. This is a clear trend,” said Frederic Lasserre, head of research at Gunvor Group, speaking at APPEC by S&P Global Commodity Insights. He said March and April were impressive, with inventories rising about 200,000 barrels a day, helping support demand and prices.

OPEC+ faces pressure to balance surplus and market share

Many in Singapore expect a late-year surplus as the Organization of the Petroleum Exporting Countries restores idled output, choosing to win back market share rather than defend prices.

President Donald Trump’s sweeping tariffs on U.S. trading partners have added another source of doubt to demand.

All of this makes the size of any surplus hard to judge. OPEC+ can plan to add supply, but capacity issues may slow the return of barrels. Even so, Trafigura Group Chief Economist Saad Rahim said China is likely to keep buying if prices stay low.

“OPEC has announced a huge amount of increases over the past few months, but a lot of those barrels have yet to really make themselves felt in the physical market,” Rahim said. Instead, he noted, Chinese tanks have been filling, while restocking elsewhere has been limited.

One point drew broad agreement on and off stage: a growing electric-vehicle fleet will chip away at a core source of oil demand.

That is now the defining feature of consumption trends, said Janet Kong, CEO of Hengli Petrochemical International Pte. “GDP growth is less commodity-intensive,” she said, noting that countries such as China have leapfrogged technologies like combustion engines and landline phones. “You don’t have to copy everything others did.”

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