Oil's roundtrip back to $100. Why China could determine what happens next
The U.S. crude oil price on Thursday topped $102 per barrel for its highest close since May.
Oil Prices Surge Amid Middle East Tensions, China’s Role in Market’s Next Move
The recent escalation of fighting in the Middle East has pushed U.S. crude oil prices to their highest level since May, with the price topping $102 per barrel on Thursday. This surge represents a nearly 50% increase from the summer low of $68.55 per barrel, which was reached about three weeks after the United States and Iran failed to reach a memorandum of understanding on June 17.
Market Response to Middle East Conflict
The uptick in oil prices comes as Saudi Arabia’s crucial East‑West oil pipeline was shut down following multiple attacks. Bob McNally, president of Rapidan Energy, says the market has been gradually rebuilding a risk premium since the collapsed memorandum and the U.S. reimposition of its naval blockade of Iran in July. Even so, U.S. crude remains well below the April 7 wartime closing high of $112.95.
China’s Impact on Oil Prices
Rebecca Babin, senior energy trader at CIBC Private Wealth, warns that analysts may not have fully accounted for a rebound in Chinese imports, which could tighten the market further. Historically, China has acted as a swing consumer, cutting its crude intake from roughly 5 million barrels per day to about 3 million barrels per day, a move that helped keep prices from soaring. Beijing also holds a strategic petroleum reserve exceeding 1 billion barrels. McNally notes that this “crash diet” has been a key factor in containing crude prices, and the country’s renewed appetite could start pushing prices higher.
China’s Growing Demand for Crude
With diesel‑making margins soaring after the Iran and Ukraine wars knocked out a sizable share of global refining capacity, Chinese refiners now have a strong incentive to re‑enter the market. Babin explains that the extreme profitability “they literally can’t pass up,” prompting refiners to purchase crude and turn it into marketable products. While China’s purchases are not expected to return to pre‑war levels, they have risen compared with the spring, according to Amrita Sen, founder of Energy Aspects.
China’s Current Import Levels
Kpler data shows Chinese imports fell to a wartime low of around 6 million barrels per day in June, a drop of nearly 50% from the 11.5 million barrels per day recorded in February. Imports have since climbed to roughly 7 million barrels per day in July and August. Matt Smith, director of commodity research at Kpler, says the buying activity this month mirrors that of July and August and is unlikely to surge dramatically beyond those levels. He adds that Beijing, as a savvy buyer, will lean on its inventories and keep refinery runs in check rather than chasing oil at triple‑digit prices.
Source: CNBC · 2026-09-12