Oil prices have remained stable around $94 a barrel more than three months into the Iran war, far below early predictions of $200 a barrel, largely due to China’s significant reduction in crude imports, JPMorgan analysts noted this week. China’s imports fell to 7.8 million barrels per day in May, the lowest in nearly a decade, helping to temper global oil price surges amid the conflict, according to fortune.com.
The Strait of Hormuz closure, which handles about 20% of the world’s oil supply, has created the largest energy disruption in history. However, China’s strategic oil reserves, totaling 1.4 billion barrels, have allowed it to reduce imports from an average of 11 million barrels per day over the past five years to current levels. This import cut accounts for roughly 74% of the global decline in crude oil trade, according to the JPMorgan note cited by fortune.com.
This development has prevented the anticipated spike in oil prices despite geopolitical tensions. Analysts had expected prices to nearly triple, but China’s import strategy has shielded the market. The current price of $94 per barrel remains below the $104 per barrel mark from a month ago, reflecting the dampening effect of China’s reduced demand on global oil markets, as detailed by fortune.com.
President Donald Trump’s recent statement that Iran will “pay the price” for slow peace progress did not push prices above $100. China’s strategic reserves and import cuts continue to play a critical role in stabilizing oil prices amid ongoing conflict, according to fortune.com.