The recent attacks on Saudi Arabia's oil-producing facilities had massive repercussions in the global energy markets, sending oil prices upwards. While Saudi has promised to return its oil production back to full capacity, the apparent disruption in the global supply has managed to expose China's vulnerability in its dependence on foreign oil.
Following the Saudi attacks, China's Ministry of Foreign Affairs expressed deep concerns about the disruption's impact on international oil supply and price stability. The country's National Energy Administration also outlined the importance of ensuring the country's energy security given the recent turn of events. The agency pointed out that ensuring China's energy security should be a number one priority at this point in time.
China is currently the world's largest oil importer, getting most of the oil it needs from other countries.
The country need for foreign oil has even influenced and shaped most of its policies. China mostly buys its oil from countries such as Russia, Iran, Saudi Arabia, and the United States.
Due to its ongoing trade dispute with the US and its threats of additional tariffs, China has all but halted its purchase of US oil. For the first half of 2019, China had reduced its imports of US oil by as much as 76 percent.
China also greatly reduced its imports of Iranian oil due to the US' re-imposed sanctions against the country and those who continue to buy its crude.
To make up for its reduced imports from the US and Iran, China has been increasing its imports of Saudi Arabian oil. In fact, the country is now buying more Saudi oil than it has done for years. Over the past months, Saudi has become one of China's biggest oil exporters, overtaking Russia for the first time in five years.
The attacks on Saudi's oil-producing facilities last week understandably caused a lot of concern for China. The situation has also caused government agencies to emphasize the need for a more diverse pool of energy sources. China has long been trying to reduce its dependence on foreign oil, and the recent disruption could be its wake up call.
China's National Energy Administration stated at a press conference on Friday that it has already laid out a plan to reduce the country's dependence on foreign oil. The agency revealed that the government will be increasing its investments and support to boost domestic production. This will apparently involve increased investments in exploration and processing throughout the sector.
According to the agency's director, Zhang Jianhua, the government expects the country's domestic oil production to reach at least 191 million tons by the end of the year. With the added investments and support, the agency expects production to reach 200 million tons by 2022.