Since the outbreak of conflict involving Iran earlier this year, the global oil market has undergone significant changes, challenging the longstanding influence of the Organisation of the Petroleum Exporting Countries (OPEC) and its allies. Founded in 1960, OPEC historically controlled oil prices by coordinating production among member states, managing spare capacity to balance fiscal needs and global demand. However, six months into the Iran war, the group’s ability to steer the market faces notable constraints, with China emerging as a pivotal factor in shaping crude oil prices.

The recent conflict has severely disrupted key energy export routes in the Middle East, particularly the Strait of Hormuz, an essential channel for many OPEC+ producers. These disruptions, coupled with damaged infrastructure, have sharply curtailed the volume of oil some OPEC+ members can physically export. In response, the OPEC+ alliance—which includes Russia and was formalized in 2016—has announced six production increases since March aimed at stabilizing the market. Yet due to logistical hurdles related to the Strait of Hormuz blockade, much of this planned output increase has not materialized in actual supply, limiting its impact on oil prices. A brief easing of tensions during a US-Iran ceasefire in July was the sole exception, temporarily boosting market optimism.

OPEC+ accounted for roughly 40% of global oil output in July, down from more than 48% prior to the conflict's escalation in February. The war has diminished the alliance’s ability to rapidly adjust supply, undermining its traditional role as a swing producer. Amid these challenges, China’s shifting oil demand patterns have emerged as a critical influence on the market. Since the onset of hostilities, China has reduced its crude oil imports by approximately 400 million barrels relative to the same timeframe last year. This drop stems from a combination of factors including restrictions on fuel exports, lower refining throughput, and increased adoption of electric vehicles.

China’s decreased demand has effectively placed a cap on oil prices during 2026, counterbalancing some of the price pressures caused by supply disruptions. This marks a reversal from the previous year when China’s robust buying helped drive global demand growth and support higher prices. Notably, China is also Iran’s largest oil customer, and Iranian shipments to China have declined sharply amid the conflict and renewed US sanctions enforcement. According to vessel tracking data, Iran’s exports to China fell to about 534,000 barrels per day in August from 823,000 barrels per day in July.

Market observers suggest that the current energy supply challenges are evolving beyond a temporary shock linked to the conflict. With no diplomatic resolution in sight nearly half a year into the fighting, some analysts argue that the ongoing Strait of Hormuz impasse is prompting a structural realignment of global oil flows. This emerging dynamic signals a rebalancing of power in the oil market, with China playing an increasingly influential role alongside the historically dominant OPEC+ alliance.