How China and U.S. eased the oil shock and kept prices from spiking even higher
China and the United States have provided critical support to the oil market, helping alleviate major supply disruption in the Middle East and preventing energy prices from rising further.
The oil market has lost nearly 10 million barrels per day (bpd) of exports from the Persian Gulf due to Iran’s blockade of the Strait of Hormuz. International Energy Agency‘s last update this week.
This is the largest oil supply disruption in history, equivalent to approximately 10% of total global consumption. But on Thursday, crude oil prices closed just above $100 a barrel; This is lower than prices seen during smaller supply disruptions following Russia’s invasion of Ukraine in 2022.
One explanation for this is that the world’s two largest economies, China and the United States, have significant influence over the oil market and use this to close the supply gap. China is the world’s largest oil importer. The United States is the largest oil producer and a major exporter.
Exports are increasing, imports are decreasing
During the Iran war, oil exports from producers outside the Middle East increased by 3.5 million barrels per day under the leadership of the USA. IEA. Meanwhile, China reduced its oil imports by 3.6 million barrels per day; which is roughly equivalent. All of Japan’s daily consumption.
The movements total 7.1 million barrels per day, or about 70% of exports lost from the Gulf. Meanwhile, Japan, South Korea and India have collectively reduced their imports by 3.6 million barrels per day, the IEA found.
“The United States and China are providing significant adjustments to offset export disruption from the Persian Gulf,” Deutsche Bank analyst Michael Hsueh wrote in a note to clients Tuesday. he said.
That’s probably why international benchmark Brent crude oil prices haven’t risen to $120 a barrel, Hsueh said.
Morgan Stanley commodity strategist Martijn Rats told clients in a note on Monday that China’s import decline was “remarkable” and the “most important component” explaining why oil prices are not higher.
President Donald Trump met with President Xi Jinping in Beijing this week. In the statement made by the White House, it was stated that the leaders agreed that the Strait of Hormuz should be opened to support the free flow of energy.
However, it is not clear when the strait will be reopened to commercial ship traffic at levels approaching pre-war levels.
The world knows Trump is determined to increase U.S. supplies of oil and refined products, Energy Secretary Chris Wright told CNBC on Friday. Wright said China, the world’s largest importer, will buy more oil from the United States in the future.
“There’s a natural energy trade there,” the U.S. energy secretary told CNBC’s Brian Sullivan in an interview in Port Arthur, Texas. “I think we will see an increase in oil imports from the United States.”
Inventory print
The question is whether the United States and China can maintain their high exports and reduced imports until the Strait of Hormuz is reopened, Rats said.
According to the United States, China has a strategic oil reserve of 1.4 billion barrels as of December 2025, the largest in the world. Energy Information Management. Rats said Beijing could survive for months and possibly the rest of the year even if its stockpiles fell by several million barrels a day.
Rats said that US stocks are under pressure. The analyst said the US export increase was mostly due to its stocks, including strategic reserves, rather than the increase in oil production.
“It is difficult to gauge the ability of the United States to maintain this high level of exports, but it appears to be under further pressure,” Rats said.
The USA had reserves of 413 million barrels at the end of last year, the second largest reserve in the world. In response to the oil shock in March, it was decided to deploy 172 million barrels of oil from its reserves.
