China is stockpiling oil for its strategic petroleum reserve at a record pace, intervening on a scale large enough to send a powerful pulse through the world crude market.
The move comes as tensions mount in the South China Sea, and the West prepares possible oil sanctions against Russia over the crisis in Eastern Ukraine. Analysts believe China is quietly building up buffers against a possible spike in oil prices or disruptions in supply.
The International Energy Agency (IEA) said in its latest monthly report that China imported 6.81 million barrels a day in April, an all-time high. This is raising eyebrows since China's economy has been slowing for months, with slump conditions in the steel industry and a sharp downturn in new construction.
The agency estimates that 1.4 million barrels a day were funnelled into China's fast-expanding network of storage facilities, deeming it "an unprecedented build".
Shipments were heavily concentrated at Chinese ports nearest the new reserve basins at Tianjin and Huangdao. "We think this is a big deal," said one official.
Copyright, NZ Herald, 2014.