China's oil reserves help curb prices as Iran war drags on
Six months into the U.S.-Iran conflict, oil prices have stayed below the worst forecasts, largely thanks to China's large strategic reserves and reduced imports.
When the United States began its campaign against Iran in February, forecasters predicted oil could surge past $150 a barrel, yet six months later prices hover near $100, far below those extremes. China, the world's second-largest oil consumer and Iran's top buyer, has drawn on a strategic reserve of about 1.4 billion barrels built over years, cutting its crude imports to roughly 8.1 million barrels per day in Q2, a drop of 32 percent from earlier in the year.
This curtailment softened global demand, preventing sharper price hikes despite recent disruptions, including a temporary Saudi pipeline shutdown and Houthi seizures of Red Sea islands. While President Donald Trump and President Xi Jinping are set to meet, their talks are unlikely to resolve the conflict, and differences over Iran remain. Nonetheless, Beijing's inventory policy is viewed as the primary factor keeping oil markets from the dire scenarios once feared.
Why it matters
China's oil stockpile is stabilizing global fuel costs amid a volatile Middle-East war.
How this story developed
- Aug 23 Iran readies major fuel price hike amid US sanctions and war pressures
- Sep 9 Brent futures rose above $100 a barrel on Wednesday, driven by escalating attacks in the Middle East that have tightened oil supplies.
- Sep 9 Iran said its forces also engaged two US vessels and eight oil tankers in the Strait of Hormuz.
- Sep 10 Brent crude rose above $105 per barrel.
- Sep 11 US Treasury prices slipped Friday, lifting the 10-year yield to roughly 4.97%, close to the 5% mark, as oil prices climbed and expectations of a Federal Reserve rate hike grew.
- Sep 12 Iran announced attacks on ten vessels near the Strait of Hormuz.
- Sep 13 A ship was hit by a projectile while transiting the Strait of Hormuz, prompting crew evacuation after a fire broke out, according to UKMTO.
- Sep 13 The Ministry of External Affairs condemned the attack on the commercial vessel MT El Gaia off the coast of Oman, saying 13 of the 14 Indian crew have been rescued and search continues for the missing Indian national.
- Sep 14 Saudi Arabia temporarily closed its east‑west pipeline after a drone strike traced to Iraq, while an Iranian commercial vessel reported casualties nearby.
- Sep 14 Oman hosts a Gulf meeting on Hormuz while Bahrain refuses to participate.
- Sep 14 Brent futures rose to $109.97, a three‑month peak, widening the price gap with regional benchmarks.
- Sep 14 Iranian cargo vessel hit near Qeshm Island, killing one crew member and prompting Oman to delay the Hormuz talks.
- Sep 17 The Federal Reserve lifted its policy rate by a quarter point, its first increase in three years.
- Sep 19 Diesel prices reached $5.68 per gallon, the highest figure since 2022.
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