China's Strategic Oil Reserves Help Prevent Crude Price Surge Despite Iran Conflict and Strait of Hormuz Closure

More than three months into an Iran conflict that prompted analysts to predict oil prices would triple to over $200 per barrel, crude has instead remained relatively stable around $94 per barrel as of the reporting date. The Strait of Hormuz's effective closure represents the largest energy disruption in global history, removing approximately 14% of global crude supply from markets. However, China's dramatic reduction in oil imports—from a five-year average of 11 million barrels daily to 7.8 million in May, its lowest in nearly a decade—has prevented the price surge that historical precedent would suggest. By drawing on its strategic petroleum reserve of 1.4 billion barrels, China has become what analysts call the market's "key rebalancing force," with its import reduction accounting for 74% of global crude trade decreases. Experts including Michal Meidan of the Oxford Institute for Energy Studies caution that this stabilizing effect has limits, noting that China must eventually rebuild reserves and resume purchasing at higher prices. Additional factors like U.S. willingness to export oil and greater-than-expected Strait passage have also moderated prices, but analysts warn these conditions cannot sustain indefinitely without structural market rebalancing.