China's Buying Power Keeps Oil Prices in Check Amid Ongoing Iran War

China's unexpected role in global oil markets has surprised many experts, particularly during the recent Iran war. Despite the Strait of Hormuz being mostly shut for five months now, Brent crude prices have remained relatively stable, hovering around $40 below the intraday high of $126 per barrel hit on April 30th.

This unexpected development is attributed to China's increased oil imports and its growing influence in global energy markets. In fact, China has become a key player in determining oil prices, thanks to its massive buying power. As The Economist notes, when market power comes from buying power, oil importers like China can do better.

The Iran war had sparked fears of a severe oil crunch, but the situation has been contained so far due to China's strategic imports. Interestingly, Iran's leverage over President Donald Trump has been reduced, and it may seem counterintuitive that China is responsible for this development.