OPEC+ Loses Sway as China Emerges as New Swing Demand Centre

The OPEC+ alliance has lost its sway in oil markets six months into the Iran war. The conflict has shut down a major export route for Middle Eastern oil and damaged energy infrastructure in several OPEC countries, eroding the group's market share and influence.

OPEC+, which accounted for about 40% of global oil output in July, can no longer quickly raise or cut supply due to the Hormuz blockade. This has reduced its ability to affect oil prices, with its statements and policy decisions now barely moving markets.

The focus has shifted from how much oil OPEC+ chooses to pump to how much oil can physically be produced and exported amid the war. In contrast to 2019, when OPEC+ decisions were closely watched for their market impact, analysts now describe its influence as minimal.

Chinese crude imports have emerged as a dominant theme in oil markets this year, with cuts helping to balance supply disruptions. China's weaker demand for oil has placed a ceiling on prices, while last year's buying spree helped underpin the market.