Five months of severe disruptions to the Strait of Hormuz have failed to push crude oil prices to the extreme levels that many analysts had forecast at the outset of the Middle East conflict earlier this year. Despite more than 10% of global crude supply being suddenly removed from the market, oil prices have not permanently breached the $100 per barrel threshold, according to a report published by Oilprice.com on July 30, 2026. Three key demand-side and supply-side mechanisms have prevented a historic price spike.
Governments, acting in coordination with the International Energy Agency, released a combined 400 million barrels from strategic petroleum reserves to partially offset the estimated 1 billion barrels of crude that failed to exit the Gulf during the first three months of the conflict. Asian economies simultaneously implemented fuel-saving measures and reduced refinery throughput. The third and arguably most consequential factor has been China's dramatic curtailment of crude oil imports.
According to the article, authored by energy journalist Tsvetana Paraskova, China had accumulated an estimated 1.4 billion barrels of crude in commercial and strategic stockpiles prior to the Iran war — the world's largest oil inventory position. Data from the U.S. Energy Information Administration (EIA) confirmed that as of end-2025, China held 1.397 billion barrels, surpassing the combined strategic reserves of the United States, Japan, OECD Europe, Saudi Arabia, South Korea, Iran, the United Arab Emirates, and India.
Armed with this vast buffer, Beijing elected to withdraw from the spot market as the Hormuz crisis intensified and prices rose. China slashed its crude imports by as much as 40% in June compared to pre-war levels, according to Oilprice.com. Seaborne crude arrivals fell to just over 6 million barrels per day (bpd) — the lowest monthly level since at least 2016 — marking the fourth consecutive monthly decline in imports, according to data from Vortexa.
Imports from the Middle East specifically collapsed to just 2 million bpd in June, down from approximately 3 million bpd in May, according to Emma Li, lead China oil market analyst at Vortexa. The aggregate effect of China's import restraint was significant. Beijing's reduced buying meant that approximately 4 million bpd of crude that would otherwise have been required by Chinese refiners did not need to reach the market over a three-month period, effectively offsetting a meaningful portion of the Middle Eastern supply shortfall.
China's demand reduction during the crisis was compounded by structural shifts in its domestic energy mix. The country experienced surging electric vehicle adoption, a large-scale switch to coal-fired power generation, and growing contributions from renewable energy sources — all of which compressed oil demand at the margin. Crude imports in July have begun to recover, rising by an estimated 1.5 million bpd from June's decade-low, as the temporary U.S.-Iran memorandum of understanding — which held for approximately three weeks between mid-June and early July — briefly reopened the Strait of Hormuz and allowed millions of barrels to exit the Gulf.
China also accelerated purchases of Russian crude during this period. Middle Eastern producers responded by cutting prices for July and August loadings bound for Asia, providing further incentive for Chinese refiners to rebuild inventories. However, the near-term outlook remains uncertain.
Renewed hostilities and escalating threats to tanker traffic in both the Strait of Hormuz and the Bab el-Mandeb Strait in the Red Sea may limit China's ability to sustain the import rebound. Furthermore, with crude prices having recovered to approximately $90 per barrel, Chinese refiners may scale back purchases for cargoes arriving after September, given tighter refining margins. Market participants will be closely monitoring China's crude buying patterns in the weeks ahead.
As Paraskova notes, Beijing has effectively become the swing demand buyer on the global oil market since the onset of the Middle East crisis in February, and its purchasing decisions will be a central determinant of the oil price trajectory through the remainder of 2026. Source: Oilprice.com, authored by Tsvetana Paraskova, July 30, 2026. Data references include the U.S.
Energy Information Administration (EIA) and Vortexa.
Source: oilprice.com