China’s Key Role In Your Gas Prices

China slashed its oil imports by more than half after the Iran war began, a move analysts say helped prevent global oil prices from climbing even higher despite major supply disruptions.

“China was definitely the most important factor in keeping prices down,” oil markets analyst Rory Johnston said. 

China typically imports about 11 million barrels of oil per day, but cut back on roughly 5 million after fighting disrupted Middle East energy markets and shipping routes, leaving more crude available to other buyers.

Analysts estimate oil could have reached $150 to $200 per barrel had China continued buying at its normal pace, rather than remaining around $90. China imports more than 70% of the oil it consumes, making it especially sensitive to price spikes. Instead of buying expensive crude on the open market, Beijing has increasingly relied on its strategic reserves, though analysts question how long that strategy can continue. 

Before the war, China’s Foreign Ministry urged all sides to de-escalate tensions, warning that regional conflict could disrupt global energy markets.

“The international community [should] make greater efforts to promote de-escalation of the conflict and prevent regional instability from having a greater impact on global economic development,” foreign ministry spokesman Guo Jiakun said. 

The U.S. government estimates China holds nearly 1.4 billion barrels of oil in underground strategic reserves and commercial storage, enough to last between six months and more than a year depending on consumption. 

China employed the opposite strategy during the COVID-19 pandemic, dramatically increasing imports as oil prices collapsed. U.S. crude exports to China jumped 211% in 2020 while benchmark oil briefly traded below zero, allowing Beijing to stockpile cheap supplies.

“China is doing this for China, fundamentally,” said Ruby Osman, a senior policy advisor on China at the Tony Blair Institute. “But obviously it’s not unhelpful for China that it has become a global public good.”