As the conflict in the Middle East continues into its seventh month, oil prices have remained volatile but have not surged to the extreme levels feared by analysts at the outset of hostilities. Chinese President Xi Jinping, currently on a state visit to Washington, can point to Beijing’s energy policies as playing a key role in mitigating a worse global oil price crisis.
After the United States launched a campaign against Iran in late February, experts warned that oil prices could more than double amid prolonged instability. However, despite persistent tensions and disruptions, prices have so far been more contained than expected. China’s substantial oil reserves and shifting energy consumption patterns have contributed to cushioning global markets.
China, the world’s second-largest oil consumer and a major importer of Iranian crude, has built the largest strategic petroleum reserve globally, accumulating around 1.4 billion barrels by the end of 2025, according to estimates from the U.S. Energy Information Administration. This stockpile gave Beijing the flexibility to sharply reduce crude imports as the U.S. and Israel increased military pressure on Iran, which also led to the effective closure of the strategic Strait of Hormuz briefly.
Beijing’s strategy includes a broader push for energy self-reliance, highlighted in its most recent five-year plan, and a growing shift toward electric vehicles and alternative energy sources. This combination helped lower global demand, easing upward pressure on oil prices for consumers in the United States, Europe and beyond.
Energy experts note that China’s rapid expansion of its strategic reserves is unprecedented. “They did in 10 years what took us 25 years after the 1973 oil crisis to do,” said retired U.S. Navy Rear Adm. Mark Montgomery, an analyst with the Foundation for Defense of Democracies.
However, recent disruptions are testing this resilience. Attacks by militias backed by Iran forced Saudi Arabia to halt a critical crude pipeline across its territory to Red Sea ports. In addition, Iran-supported Houthi rebels in Yemen seized two strategic islands, jeopardizing a key maritime shipping corridor in the southern Red Sea. Efforts to organize talks among Gulf nations aimed at reopening the Strait of Hormuz, a vital chokepoint for global oil trade, have been postponed amid continued tensions.
Against this backdrop, President Donald Trump is scheduled to meet with Gulf Cooperation Council leaders on the sidelines of the United Nations General Assembly ahead of his discussions with Xi. The council comprises Saudi Arabia, the United Arab Emirates, Qatar, Oman, Kuwait and Bahrain.
Some market analysts, including those at Bank of America, forecast oil prices to average around $83 a barrel in the second half of the year, factoring in ongoing disruptions in the Strait of Hormuz but anticipating a gradual resumption of shipping traffic. However, they caution that escalating violence or damage to key infrastructure could drive prices as high as $95 to $120 per barrel, with spikes up to $150 possible in severe scenarios.
China’s crude imports averaged 8.1 million barrels per day in the second quarter, down approximately 32% from the first quarter, indicating heavy reliance on existing reserves. Analysts credit Beijing’s steady approach for avoiding panic-induced market swings.
“It’s remarkable how China managed the market,” said Michael Lynch, president of Strategic Energy and Economic Research. “By turning to their inventories, they kept the price down for everybody.”
While the White House did not comment on whether Trump explicitly attributes stabilization in oil prices to China’s actions, the ongoing strategic interplay between U.S. diplomacy and Beijing’s energy management remains a critical factor in the volatile energy landscape.