07-27-2026, 09:32 PM
China, the world's largest oil importer, cut their oil imports by roughly 40% or more after the Iran war started. The result was a 5M barrel/day global shortage instead of 13M-20M. So oddly, we have China to thank for not having an oil shock on the economy. Nobody knows why for sure they quietly did this, but it's known that they have more strategic reserves than anybody else, and China has large-scale industrial capacity to produce both fertilizer and plastics from coal instead of oil or natural gas. They also stopped exporting refined fuels, so while their actions were good for the price of oil, it has an inverse effect on the price of refined products, but has mostly impacted countries in SE Asia that were their main customers of refinery products.
China's economy has been decelerating, so some of this could be demand destruction, or it could simply be they have enough reserves they can wait it out until the price comes back down. But if they decide to turn their import spigots back on full blast, you can expect to see some of that reflected at the pump eventually.
China's economy has been decelerating, so some of this could be demand destruction, or it could simply be they have enough reserves they can wait it out until the price comes back down. But if they decide to turn their import spigots back on full blast, you can expect to see some of that reflected at the pump eventually.