China's Reduced Demand Cuts Oil Price Spike Amid Middle East Tensions
Oil markets are in chaos due to renewed tensions in the Middle East. Prices have soared past US$100 per barrel for the first time since May, triggered by the bombing of Saudi Arabia's crucial East-West pipeline.
The pipeline was a vital release valve for Saudi exports blocked from passing through the Strait of Hormuz. Fuel prices are spiking, leading to riots and protests from Syria to Portugal to Guatemala. Global oil stocks have fallen by 507 million barrels since the US-Iran war broke out in February as nations draw down their reserves.
However, prices could have been much higher if it wasn't for China. Demand in the world's largest oil-consuming nation is set to fall for the third successive year due to earlier stockpiling and a rapid shift to electric vehicles.
The US-Iran war has removed about five million barrels a day from the market, but expert estimates suggest China cut its imports by up to four million barrels a day. Chinese leaders have long seen oil dependence as a vulnerability, and they're taking steps to wean off foreign oil.