China's oil reserves help temper prices amid Trump-Iran conflict

Oil prices have climbed to around $100 a barrel, far above last year’s average but well short of the double-digit spikes predicted when President Donald Trump began his campaign against Iran in February. Analysts say the rise has been limited by China’s decision to sharply reduce crude imports, drawing on a strategic reserve built up over years.

Beijing’s stockpile, estimated at about 1.4 billion barrels, allowed the world’s second-largest oil consumer to cut imports by roughly 32 % in the second quarter, easing global demand pressure. "The Chinese deserve credit," said retired U.S. Navy Rear Adm. Mark Montgomery, an analyst at the Foundation for Defense of Democracies. "They did in 10 years what took us 25 years after the 1973 oil crisis to do: really build a kind of strategic petroleum reserve that could allow you to weather this."

The reserve is part of President Xi Jinping’s five-year plan aimed at energy self-reliance, a policy that also includes a shift toward electric vehicles and alternative energy sources. "It's remarkable how China managed the market," said Michael Lynch, president of Strategic Energy and Economic Research. "They didn't panic and by turning to their inventories they kept the price down for everybody."

The United States and its allies continue to press for the reopening of the Strait of Hormuz, while Iran-backed militias have disrupted shipping routes in the Red Sea. Bank of America forecasts oil at $83 a barrel for the second half of the year, but warns that further escalation could push prices to $95-$120 a barrel, with spikes up to $150 a barrel in extreme scenarios.

Trump is scheduled to meet Xi Jinping during the Chinese leader’s upcoming visit to Washington, a dialogue that is expected to touch on the Iran conflict and its impact on global energy markets. The two leaders have previously discussed the need to reopen the Strait of Hormuz, though concrete outcomes remain uncertain.