China's 'Beijing Swing' Saves Global Oil Market from Crisis Prices

Despite the near-constant closure of the Strait of Hormuz for over five months, crude oil prices have remained below $100 a barrel. This unexpected development can be attributed to China's significant reduction in crude oil imports, which has blunted crisis prices.

The 'Beijing Swing,' as it's been dubbed, saw China cut seaborne crude oil imports by 5.4 million barrels per day from prewar levels through June. This represents a staggering 40% of China's total prewar imports and is roughly equivalent to India's total petroleum demand.

The reduction in Chinese refining activity explains half of the import cut, with official data showing a 2.7 million daily barrel decrease in runs from prewar levels through June. The other half comes down to commercial and strategic stockpiles, which China has been aggressively building up.