The Next Oil Rally May Depend On China, Not The Middle East

AI Summary

China's reduction in competing for Middle Eastern crude amid the Iran conflict has left more Gulf oil available to other regions while Beijing met domestic demand from stockpiles. This shift impacts global crude pricing dynamics and could influence the next oil rally, with the International Energy Agency noting China's significant crude stock draws.

Chinese refiners largely stopped competing for Middle Eastern crude during the Iran conflict, leaving more Gulf cargoes available to Europe, India, and the rest of Asia just as traders prepared for a supply shock. The International Energy Agency (IEA) estimates China drew 41 million barrels from crude inventories during June, one of the largest monthly stock draws on record. Refiners met domestic demand from storage instead of replacing those barrels through imports, allowing Beijing to ride out the sharp jump in Middle Eastern crude prices caused…