China's Next Move: Will Oil Prices Rebound or Continue to Rise?

Oil prices have broken back above $100 per barrel for the first time since May, and experts say China's next move will determine where they go from here.

The surge in oil prices comes as intensified fighting in the Middle East has forced repeated shutdowns of Saudi Arabia's critical East-West pipeline, a major contributor to global supplies.

Analysts are flagging that China's potential shift from 'swing consumer' to active buyer could rapidly tighten market balances and push prices even higher.

China cut oil imports by 3 million to 5 million barrels per day following the outbreak of war in February, releasing over 1 billion barrels from its strategic reserves instead. However, with refining margins soaring due to global capacity offline, Chinese refiners have ample incentive to boost output and buy crude.

According to Kpler, China's oil imports declined by nearly half between February and June but recovered modestly in July and August. While some experts believe that China may maintain its inventory-draw strategy to avoid triple-digit oil prices, others warn that if it ramps up imports in earnest, oil prices could retest the highs seen in the immediate aftermath of the war.