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The mystery of how China is keeping down the world’s oil prices

Your gas could be a lot more expensive right now. Thank Xi Jinping.

Gas prices are high right now — an average of roughly a dollar more than they were last year for Americans. But considering that we’re not more than 100 days into the closure of the Strait of Hormuz, which the International Energy Agency called the “most severe oil supply shock in history,” it seems like they should be higher. When the Hormuz crisis began, many analysts were predicting the price of oil would rise to $200 a barrel, which might mean gas in the $6.50 to $7 per gallon range. Instead, oil is currently trading at less than $90 a barrel.

That’s partly thanks to some promising recent diplomatic developments, but it’s never risen higher than around $114, far below the heights it reached after the Russian invasion of Ukraine in 2022. The 1970s-style gas lines that many anticipated have not materialized.

So what’s going on? There are a few explanations. One is that more oil is still leaving the Middle East than many thought possible, via alternative pipelines and via covert means through Hormuz itself. Another is that oil-producing countries that don’t depend on Hormuz, most importantly the US, are ramping up production. Many countries are also still tapping their strategic reserves. But possibly the largest and definitely the most unexpected factor is that the world’s most insatiable consumer of oil has just stopped buying it.

China turns off the tap

China is normally the world’s top crude oil importer, and it sources much of that oil from Iran and other countries in the Middle East. China’s imports have fallen from around 11.6 million barrels a day to around 7.8........

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