The oil market is currently experiencing the largest supply disruption in history, with about 10 million barrels per day (bpd) of exports lost from the Persian Gulf due to Iran's blockade of the Strait of Hormuz, according to the International Energy Agency (IEA) [1]. This loss represents approximately 10% of total global oil consumption [1]. Despite the magnitude of this disruption, crude oil prices closed just above $100 per barrel on Thursday, which is lower than the prices seen during smaller disruptions, such as after the Russian invasion of Ukraine in 2022 [1].
Key to this relative price stability has been the intervention of China and the United States, the world's two largest economies. The U.S., as the largest oil producer and a major exporter, has increased its exports by 3.5 million bpd during the Iran war, while China, the world's largest oil importer, has reduced its imports by 3.6 million bpd—an amount roughly equal to Japan's entire daily consumption [1]. Together, these adjustments account for 7.1 million bpd, or about 70% of the exports lost from the Gulf [1]. Additionally, Japan, South Korea, and India have collectively reduced their imports by 3.6 million bpd, according to the IEA [1].
Deutsche Bank analyst Michael Hsueh noted that the U.S. and China are providing critical adjustments to compensate for the export disruption, which has likely prevented Brent crude prices from surging to $120 per barrel [1]. Morgan Stanley commodities strategist Martijn Rats described China's import reduction as "remarkable" and "the single most important component" explaining why oil prices have not risen further [1].
Diplomatic efforts are also underway, with President Donald Trump meeting President Xi Jinping in Beijing this week. The leaders agreed on the necessity of reopening the Strait of Hormuz to support the free flow of energy, though it remains unclear when commercial shipping traffic will return to pre-war levels [1]. U.S. Energy Secretary Chris Wright stated that the world recognizes Trump's commitment to increasing U.S. oil supply and suggested that China will likely increase its oil imports from the U.S. in the future, highlighting a "natural energy trade" between the two countries [1].
CONCLUSION
The coordinated actions by the U.S. and China have played a pivotal role in stabilizing global oil prices despite an unprecedented supply shock from the Persian Gulf. Market sentiment remains cautiously optimistic, with analysts crediting these interventions for preventing a more severe price spike. The outlook depends on the duration of the Strait of Hormuz closure and the sustainability of current export and import adjustments.