Saudi Arabia · South Korea · China · Wall Street · Strait of Hormuz · Iran · Fortune Technology
Wall Street may have solved a nagging mystery in global oil markets as doomsday scenarios have yet to arrive
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China has quietly emerged as the global oil market’s stealthy swing consumer, potentially holding off doomsday a while longer.
Key facts
- Meanwhile, China’s crude imports plunged 20% in April to 9.4 million barrels per day, representing the biggest drop since the pandemic, and data for May suggest a steeper dive to 7 million
- But the efforts haven’t fully offset the missing Mideast oil, with the shortfall estimated at more than 10 million barrels a day
- We’re approaching unheard of inventory levels,” Eon Senior Vice President Neil Chapman warned at an industry conference on Thursday
- Taking a step back, weakness in China’s crude imports could delay the crunch point for the global oil market,” Hamad Hussain, climate and commodities economist at Capital Economics, said in a note
Summary
For months, investors wondered why crude oil prices failed to reach worst-case scenarios, even as a fifth of the world’s supply remained bottled up in Persian Gulf. To be sure, Saudi Arabia diverted exports to bypass the Strait of Hormuz, economies in Asia imposed rationing, and the world’s biggest oil-consuming countries coordinated releases from strategic reserves. But the efforts haven’t fully offset the missing Mideast oil, with the shortfall estimated at more than 10 million barrels a day. As a result, the ongoing stalemate between the U.S. and Iran on reaching a lasting ceasefire deal that reopens the strait has stoked increasing panic from a growing chorus of voices.