How China Seemingly Weathered The Iran War Oil Storm

China played the long game, and now that strategy is seemingly paying off as the rest of the world feels the Iran War’s worst oil shocks.

The Iran War triggered global disruption when the closure of the Strait of Hormuz hit oil markets, shutting off a transit route for roughly 20% of the world’s petroleum. But Beijing seems to have felt less of a pinch, capitalizing on its massive oil stockpile and energy investments.

“China has been able to weather the oil-market disruption caused by the war with Iran because it holds an estimated 1.5 billion barrels in reserve,” Steve H. Hanke, professor of Applied Economics at Johns Hopkins University, told the Daily Caller News Foundation.

China spent 2025 adding an average of 1.1 million barrels a day to its strategic oil inventories, pushing the stockpile to roughly 1.4 billion barrels by December, Axios reported. By the time the Iran war broke out, Beijing’s reserve stood well above the roughly 413 million barrels held by the U.S. and the 263 million held by Japan.

During the ceasefire last month, Iran sold nearly $6 billion worth of its oil to China using it to replenish whatever it burned through in its strategic petroleum reserve.

“I’ve seen references to various factors that have helped China, including a much larger counterpart to our Strategic Petroleum Reserve (SPR). There’s also the fact they buy oil from Russia at a deep discount, and Russia could, until recently (thanks to Ukraine), ship oil to China fairly regularly,” JD Foster, former Norman B. Ture Senior Fellow in the Economics of Fiscal Policy, told the DCNF. He stressed that China’s SPR data isn’t reliable.

‘Swamped With Chinese Stuff’

China’s economy is “two-tracking,” Foster told the DCNF. The first track is the ongoing AI boom, and the second is the increase in exports that support factories and inventory buildup. “Notice neither the AI nor export components of track one are sensitive to oil prices,” Foster said.

China’s resilience stems from years of energy diversification, strategic planning and structural changes to its energy system, Columbia University energy scholar Erica Downs told the World Economic Forum.

The country’s nuclear power output is on pace to grow almost 6% annually on average through the end of the decade, a sharp contrast to the US and EU, where generation is expected to hold roughly flat.

The U.S. hasn’t just plateaued on nuclear generation, it’s barely built anything new since the 1970s. There were no new construction starts at all between 1977 and 2013, according to the World Nuclear Association.

President Donald Trump is pushing to revive America’s long-dormant nuclear energy sector.

China’s installed renewable capacity has already topped 1.4 terawatts, powered by a supply chain that produces over 80% of the world’s solar modules and roughly 70% of EV batteries, and Chinese automakers are closing in on a milestone no other country has hit, with electric vehicles set to account for half of all new car sales.

“China’s renewables push certainly helped some, but renewables don’t make gasoline, diesel, plastics, feedstock, etc. China has never been a big user of oil for generating electricity. Mostly coal and increasingly nuclear and renewables,” Foster told DCNF. “Export figures are among the more reliable sources of data because ports can be observed and the importers have counterpart data. Exports can prop up an ailing economy, but they don’t reflect what’s happening domestically.”

As electricity demand surges amid the artificial intelligence boom, countries are racing to develop new sources of reliable, around-the-clock power.

China has increasingly promoted its fusion program as an “artificial sun,” a technology designed to replicate the nuclear fusion that powers the sun in hopes of producing virtually limitless carbon-free energy.

Gordon Chang, an American lawyer and China expert, warned the DCNF of the validity of China’s reported statistics, as they are not transparent. He described their economy as being in a distressed state.

Beijing isn’t standing still. China’s EAST tokamak is reportedly on track for fusion ignition by 2027, which would make it the first reactor to sustain plasma without external heating.

Chinese researchers are also advancing space-based solar power, recently beaming kilowatt-level energy wirelessly to multiple moving targets at once.

Beijing is also pouring billions of dollars into other continents. The country has invested as much as $33.5 billion in Africa over the past six months, according to a China Belt and Road Initiative (BRI) Investment report.

The BRI is a global infrastructure and investment program launched by China in 2013, aimed at building trade routes, ports, railways, and energy projects across Asia, Africa, Europe, and Latin America to expand China’s economic and geopolitical influence.

The term “energy powerhouse” appeared for the first time in China’s 15th Five-Year Plan covering 2026 to 2030, reflecting Beijing’s push for a self-sufficient, resilient energy system, according to the World Economic Forum. China has also shifted its Belt and Road investments away from coal toward exporting clean-energy technology since Xi Jinping pledged in 2021 that Beijing would stop building coal plants abroad, the World Economic Forum reported.

Not all of the investment is green, however; a Chinese company is building a 660-megawatt coal-fired power plant in Zambia, and metals and mining investment hit a record high, according to the China Belt and Road Initiative Investment Report.

‘We Can Pump Our Way Out Of These Problems’

The rest of the world is struggling within the interdependence of their oil on the global market.

“[China’s reserve] is nearly five times the size of the U.S. Strategic Petroleum Reserve, which has fallen to a more than 40-year low of 304.81 million barrels,” said Hanke.

“We can pump our way out of these problems,” Chang told the DCNF..

“First of all, clearly the United States needs to replenish the strategic petroleum reserve (SPR). It was wrong for both Biden and Trump to run them down. And the reason is that the Chinese talk about going to war all the time. We should be adding to our reserves, not reducing them,” Chang said.

Following Russia’s invasion of Ukraine, Former President Joe Biden authorized the largest sustained drawdown in the history of the Strategic Petroleum Reserve, including a 180 million-barrel emergency release and the sale of an additional 20 million barrels, for a total of roughly 200 million barrels.

As energy prices surged during the Iran war, Trump announced March 11 that the Department of Energy (DOE) would release 172 million barrels from the Strategic Petroleum Reserve, joining a coordinated 400 million-barrel release by International Energy Agency member nations to ease supply shortages and calm global oil markets.

“The one area where America has suffered is that consumers, especially lower-and-middle-income families not living in big cities, suffered from higher gasoline prices,” Foster said. “But that’s transitory. When oil prices fall again (as they have recently), that pain will disappear.”

“The U.S.-Israeli war of choice against Iran has disrupted many aspects of the U.S. and global economies. In particular, it has brought the bond vigilantes out of hibernation and sent interest rates higher,” Hanke said.

“This has not only affected the private sector by pushing mortgage rates above their levels before the Great Financial Crisis of 2008, but also has significant implications for financing the federal government’s yawning fiscal deficit,” Hanke said. “At present, 35% of all personal income tax revenue is consumed by interest payments on America’s debt. That percentage is destined to rise.”

“None of which is to say the economy wouldn’t have been better off without the rise in oil prices, but the effects at home in the aggregate are minor and we’ve certainly nothing to learn from China except that being energy independent matters,” Foster concluded.

Foster pushed back against whether high oil prices hurt the U.S. economy, saying the macro picture is strong.

Although China’s second quarter GDP number was 4.3%, Foster argues that this isn’t the real figure due to temporary inventory drawdown which is expected to reverse in the upcoming quarters.

“In contrast [with the U.S.], the EU economy has suffered, but then, they’re highly energy dependent, slow to adjust, and generally barely grow even in normal times,” Foster added.
“A healthy patient (the U.S.) can weather a mild bout of the flu, while a sick patient (Europe) can really suffer badly and recover slowly.”

“Europe is not energy independent — they have not been blessed with oil and gas. But they have taken it for granted that they can go to renewables and still maintain a healthy society, and they can’t,” Chang said.

Foster is optimistic regarding the improvement in oil prices: “Though higher oil prices temporarily elevated the inflation rate, guess what? When oil prices go down again, that creates not just the relief of inflation, but deflationary pressures of the same magnitude.”

“For the United States, it’d be nice to have renewables, but they’re not going to be the solution to our energy needs,” Chang said. “We’re going to need a lot of liquefied natural gas and oil. We need to pump like crazy. This is an emergency situation as far as I’m concerned, and our reserves should be filled rather than drained.”

As the war continues, the Department of War stockpiles weapons to replenish the fallen stock. Despite rumors of a cease, it looks like this may turn into a forever war and the impacts on gas a constant reminder of our new reality.