China Hits Oil Output Record

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In January, China's National Energy Administration said it was eyeing stable oil production of over 200 million tons in 2025. Two months later, oil production in the world's largest importer of the commodity hit an all-time high of 4.6 million barrels daily, per official data. China is taking "Drill, baby, drill" to heart.

It was Bloomberg's energy columnist Javier Blas who cited the Chinese official oil production data. He also pointed out the rather ironic fact that while U.S. shale producers were hunkering down amid falling oil prices despite Trump's passion for drilling, Chinese state energy majors were boosting local production consistently, reversing a downward trend in that production that had begun a decade ago-despite predictions that China's oil demand is about to peak any day now.

Earlier this year, CNPC said it was likely that demand for fuels in China peaked two years ago. The suggestion was based on a 1.9% in crude oil imports in 2024 to just over 11 million barrels daily. This was the first decline in imports of crude oil to China in two decades-but domestic production rose.

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It was, of course, EVs that prompted all the oil demand peak predictions. It wasn't just CNPC. It was pretty much every forecaster in the industry that saw China's oil demand peak as imminent. And then, just this month, CNPC again forecast that demand for oil in China would rise by 1.1% this year, driven primarily by petrochemicals. There could be some disruption in the sector because of the tariff war, which is set to affect U.S.-Chinese trade in petrochemical feedstocks, notably propane and ethane, but if the war ends soon enough, that demand projection should remain valid.

But even with peak demand-if it is indeed imminent-China will continue to boost its domestic oil production because it is a matter of energy security for Beijing. Despite all the wind and solar, and the EVs, and despite the battery storage push that has accompanied China's energy transition push. Energy security still depends on oil-and gas-and the Chinese leadership knows it.

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Of course, China will not cease to be a major importer of crude anytime soon. Its domestic production is very far from covering even half of its demand for crude. Last year, China's total oil demand reached 16.68 million barrels daily, per OPEC calculations. Compared to this figure, a domestic daily average of 4.3 million barrels is, while not negligible, not exactly an example of self-sufficiency, either. Yet this domestic average is growing.

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China is essentially doing with oil and gas what it did with wind and solar. Where U.S. drillers are accountable to their shareholders, Chinese state drillers are accountable to the government, whose responsibility, in turn, is to provide the financial support that would make projects viable-exactly as it did with wind and solar. For China, "Drill, baby, drill" is state policy and the country's track record in transition technology suggests that it will squeeze out every last drop of every field worth exploiting.

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