China's Oil Stockpiles Help Keep Prices from Soaring Despite Iran Conflict

When President Donald Trump launched his war against Iran in late February, energy analysts predicted oil prices could more than double during a protracted conflict. But six months into the war, the most dire projections have not yet come to pass. Chinese President Xi Jinping's country is being credited with helping keep oil prices from hitting worst-case levels.

Beijing has been building its strategic reserve for years and now has about 1.4 billion barrels of crude oil in storage. This allowed China, the world's second-biggest oil consumer and Iran's top buyer, to cut back on imports once the US and Israel began their bombardment and Tehran closed the Strait of Hormuz.

China's reduced oil import diet has helped ease global demand, softening the upward price effects for the United States, Europe, and beyond. 'The Chinese deserve credit,' said retired U.S. Navy Rear Adm. Mark Montgomery. 'They did in 10 years what took us 25 years after the 1973 oil crisis to do: really build a kind of strategic petroleum reserve that could allow you to weather this.'

However, experts warn that China's buffer is being tested as the conflict spreads, and further disruptions to Hormuz could push prices up to $120 per barrel or even higher. The US administration has also warned China not to aid Iran's military effort, but analysts say there's little altruism in how China came to sit on its massive stockpile of oil.