At petrol stations across Beijing, drivers squeezed in lunch-break refuels before the year’s biggest price hike took effect at midnight. But behind the queues, China was executing a contingency plan that President Xi Jinping has been building for half a decade.

The National Development and Reform Commission announced petrol and diesel prices would rise by 2,205 yuan (US$320) and 2,120 yuan per tonne respectively—the fifth increase this year. Then came the cushion: a temporary control capping the actual increase at roughly half that amount, the first such intervention since China’s current pricing mechanism was introduced in 2013.

Xi spelled out the strategy during a 2021 visit to one of China’s vast oilfields. “China must secure its energy supply in its own hands,” he said. The country has since stockpiled an estimated 1.4 billion barrels in strategic reserves, according to Columbia University’s Center on Global Energy Policy—giving Beijing a cushion most Asian economies simply don’t have.

The contrast is stark. While Japan sources roughly 95% of its oil imports from the Middle East, China’s exposure is about 50%. Iranian crude continues to flow despite the US-Israel war, slipping only marginally from 1.57 million barrels per day in February to 1.47 million in March, according to maritime tracking consultancy Kpler. Chinese state-owned tankers are already rerouting through the Red Sea.

Even Beijing isn’t immune. The price controls themselves prove that Xi’s energy security vision remains aspirational. “While a short disruption could be manageable, the prospect of lengthy disruptions and the associated price increases are raising alarm bells in Beijing,” said Michal Meidan of the Oxford Institute for Energy Studies. China prepared better than most. But when oil markets convulse, no one walks away clean.

Sources