NYT: China's Reduced Purchases Prevent Global Oil Prices from 'Spiking'

U.S.-Iran War Key News

(Central News Agency, Taipei, June 16) — The Iran conflict severed one-fifth of global oil supply, causing oil prices to surge and briefly approach $120 per barrel, though they did not spike further. The New York Times points out that China's swift reduction in oil imports was a key factor in curbing the price rise.

Since the United States and Israel launched a joint military operation against Iran on February 28, leading Iran to close the Strait of Hormuz and triggering the worst oil supply shock in modern history, global daily oil supply has decreased by over 14 million barrels. Although some analysts expressed concern that oil prices might reach $200 per barrel, prices have since retreated somewhat.

Jason Bordoff, founding director of Columbia University's Center on Global Energy Policy, stated, 'China's reduction in oil imports is one of the most important reasons why oil prices have not spiraled out of control.'

As the world's largest oil buyer, China suppressed oil price increases by rapidly cutting its import volume. Before the war, China imported an average of 11.6 million barrels of crude oil per day. However, according to customs data released by the Chinese government, by May, China's overseas crude oil procurement had fallen below 8 million barrels per day—the lowest level in over eight years.

Michal Meidan, director of China Energy Research at the Oxford Institute for Energy Studies, said China has drawn on its vast oil reserves while reducing refinery output and increasing coal consumption.

China's strategic oil reserves are estimated at approximately 1.23 billion barrels. Beijing is extremely reluctant to tap into these reserves, as doing so could threaten decades of effort to build an energy security system.

The report notes that China's recent transformation into the world's first clean energy superpower has also played a role. Another factor putting downward pressure on oil prices over the past three months has been the United States increasing oil production to record levels. However, China's sharp decline in oil imports has played a particularly crucial role in restraining global oil prices.

Yet even vast reserves cannot be drawn on indefinitely—not even for China. Logan Wright, head of China market research at consulting firm Rhodium Group, said that if the Strait of Hormuz remains closed, 'no one knows' how long China can maintain its current low import levels. (Edited by Zhu Jianling / Qiu Guoqiang) 1150616