By Admin 
The Middle East has dictated the direction of the global oil market for decades. Wars, sanctions, OPEC decisions and geopolitical tensions have been affecting crude oil prices. After the Ukraine war, Russia also emerged as a big player in the energy market. But the recent oil crisis arising from the Iran war has revealed a new truth. This time the biggest impact on the oil market came from a country which was not present at any of the negotiating tables. That country is China.
China becomes the most influential player in Iran crisis
While America and Iran are working towards an agreement to reopen the Strait of Hormuz and normalize oil supply, analysts believe that China can now decide the direction of the next phase of the oil market. According to experts, China is not only becoming the world’s largest oil buyer but also the largest country controlling energy consumption.
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China had accumulated huge oil reserves before the crisis
China had been increasing its reserves for many years by purchasing oil from Russia and Iran at discounted rates. It is estimated that China has more than one billion barrels of crude oil in strategic and commercial reserves. When global supply was affected, China did not need to make additional purchases in the market. Instead, Chinese refineries met the need by extracting oil from their reserves.
China reduced imports, market got relief
According to analysts, during the crisis, China reduced crude oil imports by about 3 million barrels per day. This quantity is so large that it can affect the global oil balance. Energy experts say that China only purchased less and used its reserves when needed. At the same time as the world was facing a supply crisis, China’s demand decreased, which helped prevent a larger rise in oil prices.
Electric vehicles also reduced oil demand
China’s influence is not limited to oil reserves only. Electric vehicles are being promoted rapidly in the country. Nearly half of new passenger cars sold in China today are electric or hybrid. According to International Energy Agency estimates, China’s electric vehicle fleet reduced demand for oil by about 1 million barrels per day last year. Apart from this, China also limited fuel export quotas and refineries reduced processing rates, which reduced the need to buy additional oil.
China’s strategy became the ‘invisible force’ of the market
Analysts believe that during the crisis, China adopted a strategy of retreat instead of aggressively competing for scarce oil. This brought relief to the global market on the demand front. Many countries including India also benefited from this because the pressure on oil prices reduced.
China may soon become the biggest buyer again
However, this situation will not last long. The oil reserves that have been used up during the crisis will have to be replenished in the future. Experts say that if oil prices fall further, China may return to the market as a big buyer. It will be necessary to refill the oil reserves that were used during the crisis.
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The entire oil equation may change in 2027
If Hormuz opens completely and production in the Middle East returns to normal, supply in the oil market may increase. The International Energy Agency has already warned that by 2027, concerns about excess supply may arise instead of concerns about shortage in the oil market. The supply will increase when additional oil comes into the market from Gulf countries and Iran. But how much impact this additional oil will have will largely depend on China’s purchases.
If China starts filling its reserves on a large scale, the excess oil can be easily consumed. If China does not do this, there may be continuous pressure on oil prices.
What does it mean for India?
This situation has brought both relief and learning for India. Relatively soft crude oil prices have helped keep import costs under control. Analysts believe that one reason for this was reduced purchases by China. However, experts suggest that India should further strengthen its energy security and strategic oil reserves. He believes that countries with reserves of several months instead of a few weeks can play a more influential role in the global market.