Iran ships 20 million barrels while China slashes imports
The past week was tumultuous for the oil market as Iran took advantage of the loosening of restrictions on its exports, shipping around 20 million barrels of crude globally. This move, following an interim agreement with the Trump administration, helped reopen the crucial Strait of Hormuz, responsible for a fifth of the world’s oil flow.
The sudden influx of supply led to a sharp drop in oil prices from their previous highs, bringing the average US gasoline prices below $4 a gallon. However, the peace talks between Washington and Tehran, which were expected to take place in Geneva, were postponed, injecting fresh uncertainty into the market.
Despite over 100 days of disruptions due to the Iran conflict and months of ambiguity surrounding the Strait of Hormuz, oil prices did not experience the sustained spike that many analysts had anticipated. This unexpected stability can be attributed to a significant decline in Chinese crude imports, which fell nearly 40% below the 2025 average, amounting to a loss of about 4 million barrels a day in demand.
While traders have been focused on the reopening of Hormuz, the reduction in Chinese buying has played a crucial role in offsetting what could have been a severe supply shock. Strategic reserve releases, lower refinery runs, and increased production from countries like Brazil, Guyana, and the US have also helped cushion the impact of disruptions in the Middle East.
The futures market reflects this sentiment, with Brent crude falling significantly from its April highs. The current diplomatic framework is being factored into the pricing, with traders cautiously optimistic about the future. However, uncertainties remain as shipping through Hormuz has only resumed gradually, and the postponement of US-Iran talks has raised doubts about the sustainability of the truce.
The ongoing weak Chinese demand is currently keeping oil prices in check, but experts warn that this could change rapidly. If Chinese buying picks up before supply risks diminish, the oil market could witness a different trajectory in the near future.
