MNI INTERVIEW: Chinese Oil Reserves Enough For Short Iran War

China’s macroeconomic exposure to the current Middle East conflict should remain manageable in the near term, supported by more than 100 days of oil import reserves and the government’s capacity to intervene, though risks could arise if disruptions persist, the head of the China Energy Policy Research Institute at Xiamen University told MNI.

“If President Trump succeeds in limiting this to the currently planned four-week operation, it would not be a big problem,” Lin Boqiang Lin said in an interview.

Oil and gas account for about 27% of China’s total energy consumption, a significantly lower proportion than in many other major economies, Lin noted, adding that coal remains a more dominant component of the country’s energy mix. This structure helps cushion the broader macroeconomic impact of higher crude prices.

“Although oil and gas import prices will inevitably rise given China’s large import volume, I see the impact on inflation being much less than in countries with higher reliance on oil and gas,” he said.

China imports roughly 70% of its crude oil, equivalent to around 11.55 million barrels per day. While higher international prices will lift import costs, Lin said the dominance of state-owned enterprises across the energy sector enables a coordinated policy response.

“Even if oil prices rise sharply, the state can intervene through its reserves and price control mechanisms to mitigate the impact,” he said. 

LONG-TERM

However, prolonged instability would present more serious challenges. The Middle East is one of China’s primary energy supply corridors, accounting for roughly 50% of crude imports and close to 30% of liquefied natural gas supplies.

“If this drags on for a long time, China could face not only higher prices but also shortages,” Lin warned.

The situation underscores the need to strengthen green-energy policy as delegates gather for the National People's Congress, where the 15th Five-Year Plan will outline strategic priorities for the energy sector, Lin said. (See MNI: China NPC To Unveil More Off-Deficit Debt)

Lin, a well-known green energy advocate, argued that the fundamental long-term solution lies in accelerating the transition away from oil dependence through expanded deployment of renewables, electric vehicles and energy storage.

The conflict should act as a catalyst for faster construction of charging infrastructure and other new-energy facilities, he added. China’s wind, solar, energy storage and electric vehicle industries currently enjoy strong global competitiveness and technological leadership, Lin said.

“From this perspective, it is possible for policymakers to substantially replace oil through wind power, solar power and electric vehicles,” he said.