China Keeps Oil Prices Down Amid Middle East Turmoil

The ongoing turmoil in the oil market has led to renewed tensions and high prices. The latest trigger is the bombing of Saudi Arabia's East-West pipeline, which acted as a release valve for exports blocked from passing through the Strait of Hormuz.

Fuel prices have risen past $100 per barrel, with unrest breaking out across the globe. Global oil stocks have fallen by 507 million barrels since the US-Iran war broke out in February, as nations deplete their reserves.

However, China's reduced demand has kept global prices down. The country's stockpiling and rapid shift to electric vehicles are responsible for lower demand, which is set to fall for the third successive year.

The Strait of Hormuz remains a bottleneck, with oil tankers and commodity vessel numbers remaining low. Producers have not been caught off guard, with oil traders increasingly using the Omani port of Sohar as a workaround. Aramco will use Sohar to ship 60 million barrels over September and October.

China's role goes beyond buying; Beijing reportedly asked Tehran to stop further attacks on Saudi infrastructure. Chinese leaders have long seen oil dependence as a vulnerability, and have bet heavily on electric vehicles. Almost two-thirds of new cars sold in China are now battery-electric or hybrids.