The world economy has been largely spared from skyrocketing fuel prices in part for a surprising reason — China has cut back its daily imports by 3 million barrels of oil.
After Iran shut down the Strait of Hormuz in retaliation for the war, an export of at least 10 million barrels of oil a day from the Middle East were lost, with fuel prices soaring to a high of $126.41 as analysts warned for the worse.
But prices are now hovering at around $90, well below what experts predicted, and the clues as to why the global market has been spared points to China’s decision to reduce oil imports, the Wall Street Journal reported.
With no end in sight yet for the war in Iran, Saudi Arabia, the world’s largest crude exporter, opted to hike the price of its Arab Light grade crude.
Other nations followed suit to make up for the loss of exports due to the closure of the strait, which would leave China, the world’s largest importer of Gulf crude, facing substantial costs.
Rather than pay up, China cut its imports from about 11 million barrels a day to around 7.7 million, according to Beijing’s customs data.
The massive drop in imports from China effectively kept the global oil supply from suffering the dramatic shocks experts predicted — along with the 2 million barrels of oil escaping the Strait of Hormuz every day.
