Beijing Gets the Credit: How China Helped Prevent a Global Oil Market Crisis

A sharp drop in China’s imports of crude oil has become one of the main factors preventing a surge in global energy prices, against the backdrop of the war with Iran and fears of prolonged disruption to supply through the Strait of Hormuz, Maariv reported.

According to a Wall Street Journal report, China imported only 7.8 million barrels of oil per day in May, a decline of about 3 million barrels compared with the average in recent years. That is an amount similar to the combined daily oil consumption of Italy and France. When the war broke out and the Strait of Hormuz was almost completely shut, analysts estimated that oil prices could jump to $150 or even $200 a barrel. In practice, despite the blockade in the strait lasting for several months, Brent has remained below $100.

According to the report, alongside increased oil exports from the United States, it is the drop in Chinese demand that is helping keep energy markets relatively stable. In China, imports have been reduced in part thanks to a rapid transition to electric transportation, wider use of high-speed trains instead of short flights and gasoline-powered vehicles, as well as a decline in activity at refineries and petrochemical plants.

Another factor is the large oil reserves Beijing accumulated before the war began. According to estimates by maritime intelligence firms, including Vortexa, China holds reserves of more than 1 billion barrels of oil after buying large quantities of Russian and Iranian oil at low prices. The main question now is how long China will be able to continue relying on the stockpiles it has built up. Some analysts estimate that by the summer it will have to return to the market on a larger scale, while others believe the emergency reserves will be enough for at least another six months.