Analysis of Oil Import Risk and Strategic Petroleum Reserve: The Case of China

Based on the data of 17 countries along the "One Belt and One Road" from 2000 to 2016, this paper quantified China's oil import risks, and proposed a quantitative model to cope with the oil disruption. According to the model, the optimized scales of strategic petroleum reserve (SPR) and alternative fuels were calculated. An analysis of China's examples shows that Saudi Arabia and Russia were the countries with the least supply risks in 2000-2016, and 10 countries with the highest risk of marine transportation were mainly located in the Middle East. China's oil imports from Iraq and Qatar were more vulnerable to supply risks, and oil imports from other oil-producing countries in the Middle East were less affected. In addition, China's oil imports from Asian countries were more susceptible to transportation risks, and those from the Middle East countries were less or not affected. If only SPR is considered, the optimal scale of SPR is 77 "days of oil consumption" to cope with the once-in-a-decade disruption to oil supplies. Once both alternative fuels and SPR were considered, China's optimal alternative fuels' size is 10 "days oil consumption" and SPR size is 75 "days oil consumption" to cope with the once-in-a-decade oil disruption. When changing disruption size, the proportion of alternative fuel and SPR will also change. If disruption scale continues to increase, the alternative fuels' size increases from 10 "days of oil consumption" to 25 "days of oil consumption", then decreases to 0, and the SPR size increases from 75 "days of oil consumption" to 270 "days of oil consumption". This indicates that the SPR is more important than alternative fuels when the disruption scale is large.