When Tehran first throttled maritime trade through the Strait of Hormuz in early March, oil market analysts counted the limited number of days until the release of Western strategic reserves would prove insufficient to make up for the loss of supply and prices would rocket.
While it’s certainly true that Western strategic oil reserves have seen their stocks fall, in some cases dramatically to multi-decade lows, the scenario of far greater downside for the world economy did not come to pass as anticipated for one major reason: China.
As the chart below from Bloomberg illustrates, Chinese crude oil imports plummeted once it became clear that the throttling of oil flows through the Strait of Hormuz would become a long-term fixture of the global trade landscape.
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