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China’s flexible oil buying helped prevent a surge in crude prices

After Strait of Hormuz closures removed more than 10% of global supply, China reduced imports by as much as 40% in June compared with pre-war levels, helping cushion prices.

Reported · Written up by our desk · Energy

Oil prices did not spike to the $150 to $200 per barrel range that some analysts warned about after the Strait of Hormuz saw mostly closures for about five months, even as more than 10% of global crude supply disappeared from the market, according to OilPrice.

The outlet points to several factors that kept crude from sustaining levels above $100 per barrel, including governments drawing down strategic reserves as part of an IEA-coordinated 400 million barrel stocks release to offset about 1 billion barrels of crude that never left the Gulf in the first three months of the conflict.

OilPrice also cites Asia’s demand slowdown, where countries used fuel-saving measures and cut refinery throughput, reducing consumption during the disruption.

The biggest cushion, the outlet says, came from China’s position as the world’s largest crude importer, which had built up an estimated up to 1.4 billion barrels across commercial and strategic stockpiles before the Iran war, allowing Beijing to withdraw from the spot market and reduce imports by up to 40% in June versus pre-war levels.

Latest closeWTI crude $84.21 ▼0.3%

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