Plummeting Over 50%! Amid This Epic Collapse, China Is "Buying the Dip" in Crude Oil

This time, Saudi Arabia has prioritized discounting crude oil for key customers—including China—and announced an unlimited purchase policy for one Indian oil company and two Chinese petrochemical enterprises. It is therefore no surprise that the China Association of the National Shipbuilding Industry openly declared that the global plunge in crude oil prices is nothing short of a windfall—akin to gold bricks falling from the sky. Industry insiders estimate that for every $10 drop in crude oil prices, Chinese enterprises and residents collectively save ¥107 billion annually. A Broader Objective: China’s Strategic Petroleum Reserve With 84 massive oil tankers now collectively setting sail toward the Gulf to stock up on cheap oil, China’s motivations extend well beyond meeting day-to-day industrial manufacturing needs. A far more ambitious goal is rapidly replenishing China’s strategic petroleum reserve (SPR). Reviewing China’s history of large-scale crude purchases over the past decade reveals a clear pattern: whenever international oil prices crash, China accelerates SPR acquisitions. For instance, during the 2015–2016 oil price lows, the pace of strategic reserve injections notably increased. According to Zhongda Futures, it is widely believed that China opens its strategic petroleum reserve acquisition window when international oil prices fall below $40 per barrel. By international convention, a country requires roughly 90 days’ worth of petroleum reserves to ensure normal national operations—but China’s strategic reserves still fall short of this benchmark. China began building its strategic petroleum reserve relatively late—around the early 2000s, following its accession to the WTO. Large-scale construction of reserve bases commenced in 2004. To date, China has established major crude oil reserve bases in Dalian, Huangdao, Zhenhai, and Zhoushan, and plans to complete Phase III of its national crude oil reserve base construction by 2020—adding 28–85 million tons of crude oil storage capacity. Moreover, according to the *Medium- and Long-Term National Petroleum Reserve Plan (2008–2020)*, China aims to build a total reserve capacity equivalent to 100 days of net oil imports by 2020. In September 2019, the National Energy Administration stated that China’s combined commercial and strategic crude oil inventories stood at approximately 80 days of net imports—still about 20 days (roughly 25.7 million tons) short of the target. It is highly likely that, capitalizing on the current international oil price collapse, China will significantly ramp up crude oil imports in 2020 to reach its targeted reserve level. Industry insiders estimate that, assuming no constraints from infrastructure or other bottlenecks—including commercial inventories digested in March and newly completed strategic reserve facilities—China could theoretically absorb around 200 million barrels of crude oil imports. Oil Collapse: Winners and Losers With oil prices already slashed in half, China has swiftly moved into action—calmly purchasing cheap crude to fill its reserves and dramatically lowering import costs. Meanwhile, on the evening of March 19, U.S. Treasury Secretary Steven Mnuchin announced plans to buy $10–$20 billion worth of crude oil during this low-price period. Yet not everyone is celebrating the oil price collapse. Foremost among the losers is Saudi Aramco (2222), the world’s largest oil company, whose stock has plunged sharply—losing over ¥128.74 billion in market value across just nine trading days, equivalent to Kweichow Moutai’s entire market capitalization. U.S.-listed global energy giants have fared even worse: their share prices have collapsed consecutively—so severely that the term “bankruptcy-level crash” is not an exaggeration.

U.S. Stock Market Analysis (Aug. 6): Institutional Investors Turn Bearish!

Markets cannot rise every single day; corrections after extended rallies are entirely normal—and there’s no need to conclude the bull market has peaked simply because of one or two days of decline. If, over the next several trading days, moving averages flatten and begin converging, signaling a sideways consolidation phase, that would represent a classic case of “trading time for space”—a necessary pause to build momentum for the next leg up. On the policy front, President Trump plans to announce broad-based tariffs on semiconductors and pharmaceuticals within the coming week—similar in structure to the non-country-specific tariffs previously imposed on steel and aluminum. These tariffs leave little room for negotiation and serve a clear objective: incentivizing production to return to the United States. Pharmaceutical tariffs will start low but escalate progressively—to 150%, and potentially even 250%; semiconductor tariffs will begin at 10% and eventually exceed 25%. While such measures ostensibly protect and promote U.S. domestic manufacturing, they may ultimately prove more harmful than beneficial to the pharmaceutical sector. High tariffs may indeed encourage greater domestic drug production and reduce international competition—but they will also substantially raise manufacturers’ raw material costs, especially for imported active pharmaceutical ingredients (APIs), thereby pushing up final drug prices. Ultimately, these rising costs won’t be borne by companies, but by American patients and the U.S. healthcare system. From a market perspective, the pharmaceutical sector posted lackluster performance overall throughout the day. Major players—including Pfizer, Merck & Co., and Johnson & Johnson—all declined in line with the broader market, indicating that the tariff announcement triggered no immediate, pronounced reaction from capital markets. Historically, we’ve long viewed aging demographics as a structural tailwind for pharma stocks—but reality paints a different picture: persistent government pricing pressure on Medicare reimbursements, widespread public criticism of drug pricing, and the need for sustained high R&D investment all make it difficult for firms to deliver consistent, high growth. At the market level, several prominent Wall Street investment banks have recently issued joint warnings. Morgan Stanley strategist Mike Wilson forecasts a potential 10% correction this quarter due to tariff-related shocks; Evercore anticipates a possible 15% decline; Deutsche Bank likewise expressed concerns about near-term market pullbacks. Although these views lean cautious, no systemic risks have yet emerged—this is most likely prudent risk communication and expectation management. 1. Palantir delivered an outstanding earnings report: Q2 revenue surpassed $1 billion, up 77% year-on-year; EPS came in at $0.16—both figures exceeding consensus estimates. The company also raised its full-year revenue guidance to $4.14 billion. All three core financial metrics beat expectations, sending shares soaring with a gap-up opening. Some analysts even project Palantir’s market cap could one day approach $1 trillion—with roughly 150% upside remaining from current levels. I briefly held Palantir shares myself but sold too early—missing out on the rally. At this point, it’s probably not ideal to chase the stock. 2. AMD’s earnings were comparatively underwhelming. Although revenue rose 32% year-on-year to $7.685 billion—beating market expectations—EPS dipped to $0.48, narrowly missing the consensus forecast of $0.49. Additionally, data center business revenue grew only 14%, falling short of expectations. While the company’s forward-looking guidance remains positive, it faces headwinds from U.S. government export controls targeting China—a regulatory risk that could similarly affect NVIDIA. That said, AMD’s results are unlikely to trigger a sharp sell-off. After short-term profit-taking, the stock remains well-positioned for a rebound.

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