(Yicai Global) March 3 -- The Russia-Ukraine conflict has caused international oil prices to soar sky high in recent days, with the Brent Crude Oil price reaching USD110 per barrel, and will be a test of the energy security of China, the world’s largest petroleum importer, according to a Yicai Global special report.

China, which is the second-largest oil consumer after the US, imports around 72 percent of its crude oil needs, and last year brought in 513 million tons of the black gold.

The country needs to focus on reducing this dependency otherwise the slightest overseas disturbance can pose a threat to its energy security.

China should enhance its ability to increase reserves during periods when the oil price is low and persist in upgrading its energy sector to eliminate the country’s dependence on oil.

The main reason for the constant rise in oil prices over the last few days is the Russia-Ukraine conflict. Russia is one of the biggest oil producers in the world and the market is concerned that the unrest will exacerbate the shortage of oil and gas. Countries are rushing to stockpile as quickly as possible to help reduce the impact of high oil prices on economic recovery.

Yet it is easier to boost reserves when oil prices are low. International oil prices dropped hugely after the Covid-19 pandemic broke out in 2020 and the Brent Crude Oil price remained below USD40 for most of the nine-month period from March to November that year. Stockpiling when prices are low can help reduce the impact of a sharp rise in oil prices on the economy.

The decision makers have now realized the importance of boosting oil reserves to guarantee energy security. China said in its latest medium to long-term plan that it will generate reserves equivalent to 100 days of petroleum imports. And Chinese companies have begun to acquire and invest in a large number of oil and gas resources worldwide in recent years.  

But more importantly, it is essential to reduce the dependence on oil. The country has made public its emissions peak and neutrality targets and is very supportive of green sectors such as new energy vehicles and solar as well as new infrastructure. These initiatives are based on scientific decision-making and the premise of ensuring energy security. With constant achievements in new energy, there is reason to believe that China will eventually wean itself off oil. 

Editors: Xu Wei, Kim Taylor