U.S. and China Trade Shifts Buffer Global Oil Shock

Despite the closure of the Strait of Hormuz for ten weeks following U.S. and Israeli strikes on Iran, global oil prices have not spiraled into a full‑blown crisis. Analysts say the world economy has been shielded by structural support from the United States and China.

Morgan Stanley strategists noted that while Middle East supply fell by 12.3 million barrels per day, increased U.S. exports and reduced Chinese imports absorbed 9.3 million barrels per day of the shock. This adjustment prevented prices from reaching worst‑case scenarios. JPMorgan CEO Jamie Dimon echoed the view, saying changes in U.S. exports and Chinese imports may explain why the Iran war has not severely impacted oil prices, even as the conflict intensifies.

The disruption is historic. Morgan Stanley estimates the war has already cost the market nearly 1 billion barrels of supply, the largest interruption in oil market history. Even if the Strait reopened immediately, it would take time to restore supply chains, leaving the market short by 1 billion barrels. Yet Brent crude remains around USD 106 and WTI near USD 101 — elevated but below the USD 130 peak seen after Russia’s invasion of Ukraine in 2022.

The relative moderation reflects both pre‑war surpluses and investor expectations of resolution, but deeper reasons lie in trade activity from the U.S. and China. Tanker‑tracking data show seaborne oil flows have actually increased. The U.S. has led supply expansion, boosting exports by 3.8 million barrels per day, with Canada, Argentina, and Venezuela contributing smaller increments. On the demand side, China has led reductions, cutting imports from 14 million barrels per day a year ago to 8.5 million now, drawing on reserves. Japan, South Korea, India, and Singapore also reduced imports, while Europe and other refiners absorbed the rest.

Together, these shifts have balanced global seaborne trade and buffered the shock. Analysts say the adjustments explain why oil prices, though high, remain moderate compared with past crises. The U.S. has acted as the supply stabilizer, while China has acted as the demand suppressor, preventing the Iran conflict from escalating into a global energy disaster.