The above vid dropped before the most recent increased hostilities. And the recent spike over $100 a barrel. It's had 3 million views to date.
But still, it's a fascinating outline of what's going on in the international oil market, and likely reasons.
Max Fisher, the presenter, now makes his living off The Bigger Picture, an Explainer-type vid. He's ex The New York Times, The Atlantic and the Washington Post, so you can make your own judgements of his priors.
I will say however, the above presentation comes across as based and neutral, even to me, a man of a certain bias.
- At the start of the Iran war, closing the Strait of Hormuz was expected to block ~20 million barrels per day of oil (about 20% of global supply). The unified global oil market has essentially zero slack: ~100 million barrels produced and consumed daily. This created a massive deficit that analysts predicted would ground flights, darken cities, triple gas prices, and cause widespread economic collapse.
- Conventional defenses only partially offset it: alternative pipelines (Saudi and UAE) restored ~7 million bpd; the largest-ever coordinated release of strategic petroleum reserves by 32 countries added an average of ~2.5 million bpd. That still left a ~10–12 million bpd shortfall. Reserves were rapidly depleting and would only last a few months.
- The predicted shock largely failed to materialize (prices later eased in places). The decisive factor was China secretly cutting its oil imports roughly in half—by about 5.5 million barrels per day (more than India’s total imports or the combined imports of Europe’s five largest economies). This reduced the global deficit to a more manageable ~5 million bpd range, resulting in higher prices, some localized disruptions, and flight issues rather than systemic collapse.
- China achieved the cut through several coordinated (and mostly unannounced) steps:
- A total ban on fuel exports from its large refining industry (preventing refined products from leaving the country).
- Massive ramp-up of coal use (record burning, plus coal-to-plastics and coal-to-fertilizer processes) to substitute for oil.
- Domestic demand reductions (fewer domestic flights, higher rail use, accelerated EV adoption already enabled by prior subsidies).
- Drawing down an enormous strategic oil stockpile (visible aboveground storage alone estimated at ~1.4 billion barrels—larger than all other countries’ reserves combined—and potentially far more in underground caverns and other sites). This could sustain high drawdown rates for well over a year.
- China had built those reserves largely by buying heavily discounted Iranian and Russian oil (sanctioned by the West) via a “dark fleet” of tankers, rebranding, teapot refineries, and—most critically—settling trades in Chinese yuan rather than US dollars. This bypassed the dollar-based global oil market and US financial controls.
- The speaker rules out two motives: purely self-protection from high prices (China kept drawing reserves even after prices fell below its average replacement cost) and soft-power/global goodwill (the moves were secret and the fuel-export ban hurt Asian neighbors China wants to court).
- Plausible motives (not mutually exclusive):
- Preparing for / demonstrating a solution to the “Malacca Dilemma” (US naval ability to blockade the Strait of Malacca and cut off ~80% of China’s oil imports in a Taiwan or other conflict scenario).
- Gaining leverage over the United States/Trump (China could resume heavy imports and tighten global supplies at will).
- Protecting China’s export-driven manufacturing economy by preventing collapse among its major customer countries.
- Demonstrating a new ability to influence global oil prices/demand (a form of “oil weapon” comparable in impact to the 1973 Arab oil embargo).
- Broader implications: China has reduced a key vulnerability that previously made conflict with the US riskier for Beijing (raising the relative feasibility of Taiwan-related scenarios). It now holds significant leverage over global oil markets. In the shifting oil-power landscape, traditional heavyweights (US guarantee of free flow + dollar system; Russia as major exporter) look weaker, while China (and to a degree Iran) look stronger. The speaker expects China will use this demonstrated capability again.
