China and its crude oil buying behavior in the spring and summer have stabilized global oil markets, and it is Beijing — not OPEC — that is now calling the shots, according to Igor Sechin, chief executive of Russia's biggest oil producer, Rosneft.

Sechin, who is considered a close ally of Vladimir Putin and has been a long-time critic of OPEC, said China has strengthened its position as the ultimate swing buyer on the global market and has taken the initiative away from the producer group. The remark inverts the traditional market dynamic in which OPEC, and above all its de facto leader Saudi Arabia, has long acted as the swing producer, adding or withholding supply to balance global crude markets.

"China has successfully turned from a major consumer and importer into an active market leader," Sechin said at an economic forum in Vladivostok in Russia's Far East.

"China took the initiative out from OPEC this year and without joining any cartels, it has managed to stabilize the global market by slashing its crude oil imports by about 5.5 million barrels per day (bpd)," Russia's top oil executive said.

Arguably, the biggest cushion the market has had this summer was China's crude oil import behavior. Before the Iran war, the world's largest crude oil importer had amassed an estimated up to 1.4 billion barrels of crude in commercial and strategic stockpiles. That huge cushion allowed it to slash imports when the Strait of Hormuz closed and prices spiked. It is a dynamic worth watching going forward: the size and pace of China's stockpiling and drawdowns — visible only partially in official import and reserve data — have become a key variable for traders assessing where the market's true demand floor and ceiling lie.

Ever the opportunistic buyer, China withdrew from the spot market amid the Middle East crisis, and by cutting this import demand, Beijing single-handedly offset part of the lost supply.

The market appeared to have underestimated China's ability to be as flexible in its crude oil imports as to slash purchases by as much as 40% in June compared to pre-war levels.

In addition, during the crisis, China has also seen soaring EV use, a massive switch to coal, and rising shares of power generation from renewable energy sources.

"I believe that further growth of the strategic and commercial reserves will strengthen China's role in the energy market, amid OPEC's fading influence [and] a shrinking number of members," Sechin said.

Earlier this year, the United Arab Emirates (UAE), one of the cartel's biggest producers, quit OPEC effective May 1 to pursue its national interests.

By Charles Kennedy for Oilprice.com