Why oil markets stabilized far faster than anticipated | DW News

Oil Market Stabilization After the Strait of Hormuz Shock

Stabilization in the oil market happened much faster than expected after the Strait of Hormuz shock. DW reports that the key driver was a sudden, dramatic reduction in China’s crude oil imports following the start of US–Iran negotiations in June, alongside the June US–Iran memorandum that opened talks.

Rory Johnston’s Analysis (DW)

DW oil analyst Rory Johnston argues the following:

• China “saved” the global oil market by cutting imports by about 40–45%—roughly 5 million barrels per day from pre-war levels. Johnston notes this decline was larger than the total amount released from the world’s strategic petroleum reserves, which had been expected to be necessary in a severe supply shock.

• The mystery: why China’s economy didn’t visibly suffer. Commentary generated around the issue suggests analysts infer demand destruction indirectly because China does not publish demand figures. Despite signals that imports fell sharply, China did not appear to experience a depression-like shock comparable to the scale of import retrenchment.

Possible Explanations (Not Fully Confirmed)

Johnston and related commentary raise several hypotheses:

• China’s energy transition and operational flexibility This includes long-running shifts such as electrification/EV growth and diversification away from foreign oil, plus flexibility in related petrochemical demand. However, Johnston suggests this alone likely cannot explain the scale or duration of the import drop.

• Stockpiling The argument is that China may have been building fuel inventories (e.g., diesel/gasoline) to hedge against a potential cutoff. Johnston notes, though, that China did not immediately return to buying even as prices fell.

• Strategic or altruistic motivation China may have intentionally reduced purchases to prevent an even worse energy crisis that could harm Asia—and indirectly damage China’s interests.

• Geopolitical “deal” speculation (without evidence) Johnston raises a “tin foil hat” possibility that timing around talks involving the Trump administration in Beijing coincided with China pulling back imports as part of broader sphere-of-influence bargaining. Johnston emphasizes there is no firm evidence, only timing-based questions.

Broader Interpretation

Johnston suggests the episode could show that China is able to influence global energy markets in a similar way to how it has influenced energy-transition supply chains—potentially undermining the Western/North American assumption that fossil-fuel supply dominance is a geopolitical advantage.

Winners and Losers

The report highlights:

• China as a major winner for demonstrating large-scale capacity to cut imports without immediate economic damage.
• Iran as another winner, with increased strategic leverage over the Strait of Hormuz relative to expectations.
• Gulf states and OPEC as losers, particularly Saudi Arabia. The UAE is acknowledged for adapting through rerouting and “shadow transit” trade, but OPEC faced a political setback—especially considering the UAE’s loss of cohesion/positioning within OPEC.

Human Costs (Conclusion)

The report concludes by emphasizing that human costs remain severe: higher energy prices increased food and transportation costs, worsening food insecurity and harming vulnerable populations in the global south—effects that matter even if China’s actions may have prevented an even worse global energy crisis.

Presenters / Contributors

• Pablo Fajgelbaum (host/announcer)
• Rory Johnston (oil analyst guest)
• Anna Hommel (producer, Berlin)
• Joel Dulroy (producer, Berlin)
• Aaron Tilton (producer, Berlin)
• Leon Yuter (producer, Berlin)
• Melanie Marker (producer, Berlin)
• Stephen Habick (producer, Berlin)