What does it mean for China if oil prices reach $100 per barrel?

Investing.com — Barclays analysts say that although China remains highly exposed to the risk of Middle Eastern energy supply disruptions, several factors could buffer the impact if oil prices rise to $100 per barrel.

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Barclays notes that as tensions in the Middle East escalate, Brent crude oil prices have surged significantly this year, raising questions about how sustained high oil prices might affect China’s growth and inflation outlook.

China heavily relies on imported oil, with about 75% of its crude oil needs met through imports, of which approximately 90% arrive by sea. A large portion comes from Gulf oil-producing countries such as Saudi Arabia, Iraq, the UAE, Kuwait, and Qatar.

Including Iranian oil, this dependency is even higher. Commodity analysis cited in the report shows that last year, Iranian crude accounted for about 12% of China’s oil imports.

Barclays estimates that over 35% of China’s total oil consumption is transported through the Strait of Hormuz, making any disruption in this waterway a significant risk to China’s energy supply.

China also faces vulnerabilities in its natural gas market. The country is the world’s largest importer of liquefied natural gas (LNG), with about 30% of LNG imports related to shipments through the Strait of Hormuz, including large supplies from Qatar.

Despite this exposure, Barclays states that China has multiple buffers to mitigate the economic impact of oil shocks.

These include the country’s large strategic petroleum reserves, estimated at around 1.2 billion barrels, enough to cover about 104 days of imports.

China has also demonstrated the ability to substitute Iranian oil with supplies from other producers, especially Russia, and can source additional imports from countries like Brazil, Malaysia, Angola, and Canada.

Another mitigating factor is China’s accelerated transition to renewable energy, which has gradually reduced the share of oil in its overall energy consumption in recent years.

Barclays estimates that if oil prices remain around $100 per barrel in 2026, China’s overall inflation rate could rise by about 0.3 percentage points, while economic growth might slow modestly due to rising production costs and weak consumption.

However, the bank states that China’s evolving energy structure and supply flexibility mean that the macroeconomic impact of oil shocks could be much lighter than in the past.

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