How China eased pressure on oil markets by halting purchases and relying on reserves
How China eased pressure on oil markets by halting purchases and relying on reserves The closure of the Strait of Hormuz should, in principle, have caused a far greater shock to oil markets than it has. This, in large part, is due to China’s policy of using its strategic stockpiles rather than purchasing crude oil at inflated prices due to the war. Before the war, the strait carried roughly 20…
China has eased pressure on oil markets by halting crude oil purchases and relying on its strategic reserves, despite the closure of the strategically important Strait of Hormuz. This move has been crucial in preventing a more severe impact on global oil supplies, which would have been expected if the strait had been blocked. The Strait of Hormuz is responsible for carrying about 20 million barrels of oil per day, which is a fifth of the global daily oil consumption.
Even though roughly 10 to 14 percent of the global oil supply has remained inaccessible since the onset of the war, the impact has not been as severe as previous Middle East crises. Comparatively, the 1973 Arab oil embargo, which led to a quadrupling of prices, only disrupted 7 percent of the global supply. Similar events such as the 1979 Iranian revolution and the 1990 invasion of Kuwait, which more than doubled prices, each blocked only 6 to 7 percent of the supply.
Currently, oil prices have risen by approximately 50 percent, with Brent crude stabilizing around $85-$90 per barrel, up from around $60 at the start of the year.
Written by urgent.news from Middle East Eye's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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