China's Oil Reserves.

One factor highlighted by analyses from both Morgan Stanley and Bloomberg is reserves — oil reserves are among the most important elements.

The most important player in this context is China. China used to import around 25–35% of its oil from the Persian Gulf. At the same time, the most recent data shows that China’s oil imports fell from 12 million barrels to just over 8 million — a drop of more than 3 million barrels, or over 30%. This is no coincidence: China took advantage of the fall in oil prices in 2025 to build up a huge crude oil reserve. Could these reserves have been built precisely for a contingency situation?

It is impossible to say for certain — and, in practice, that does not matter. What this effectively means is that, solely due to China’s actions, we may witness a significant delay in how the reduction in supply is reflected in prices. China is absorbing the shortage and the inflationary pressure — and it has a strong incentive to do so. Chinese industry remains in a slowdown phase, while maintaining trade with the West is imperative for China.

Higher domestic inflation could, under the current circumstances, help reduce the real burden of rising debt and stimulate consumption and investment. However, the West avoids a recession — something that would be iust as painful for China as it would be for the West itself. What is crucial to understand is that this market freeze will persist as long as China continues to effectively subsidize global disinflation. This mav be one of the key issues, yet it is rarely mentioned in the context of the upcoming meeting between Donald Trump and Xi. Jin.

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