China Helps Limit a Larger Oil Shock
Oil prices remain high and volatile six months after President Donald Trump launched the war against Iran. However, the worst forecasts have not materialized. China’s long-term energy strategy has helped prevent a sharper increase by reducing its need for imported crude during the conflict.
Beijing spent years building the world’s largest oil stockpile, estimated at about 1.4 billion barrels by the end of last year. President Xi Jinping also placed energy self-reliance at the center of China’s latest five-year plan. Those preparations gave the country greater protection when the Strait of Hormuz effectively closed.
Stockpiles and Alternatives Reduce Demand
China drew from its reserves and sharply reduced crude imports after the United States and Israel began attacking Iran. The country is the world’s second-largest oil consumer and Iran’s leading buyer. Its growing use of electric vehicles and other energy sources provided additional support.
Lower Chinese imports eased global demand and softened the price increases felt in the United States, Europe, and other markets. Analysts credited Beijing with creating a reserve capable of absorbing a major supply disruption. That outcome also supports Xi’s argument that economic resilience requires greater self-reliance.
Recent developments are testing that protection. Iran-backed militias forced Saudi Arabia to temporarily close an important pipeline to Red Sea ports. Houthi forces also seized two islands near a major shipping route, while regional talks about reopening Hormuz were postponed.
Further Escalation Could Drive Prices Higher
Brent crude currently trades near $100 per barrel after briefly reaching $126 in April. Bank of America analysts said prolonged shipping disruptions could push prices to between $95 and $120. Damage to major energy infrastructure could produce temporary spikes reaching $150.
Iran and oil are expected to appear in the upcoming talks between Trump and Xi, although a diplomatic breakthrough appears unlikely. Washington wants Beijing to pressure Tehran, but China opposes the war and further economic threats. Experts also note that China built its reserves partly for possible conflict over Taiwan, not to stabilize prices for other countries.
References
Madhani, A. (2026, September 19). Oil prices are high but could be much worse. Trump has China’s Xi to thank for that. AP News. https://apnews.com/article/trump-xi-iran-oil-china-78b8ccd21cbc4bc0ab19a79f68372ec0