The biggest oil supply shock in history is hitting the market. Ten million barrels per day are locked behind Iran's blockade of the Strait of Hormuz. That's about 10% of what the world burns.
Brent crude closed Thursday just above $100 a barrel. Prices ran much higher after Russia invaded Ukraine in 2022, and that shock was a fraction of this size.
Why aren't prices much higher? The world's two biggest oil players have stepped in. One is a buyer. One is a producer.
Oil exports from outside the Middle East have jumped 3.5 million bpd during the Iran war, led by the U.S., per the IEA.
China, the world's largest oil buyer, has cut its imports by 3.6 million bpd. That's about all the oil Japan burns in a single day.
Together those moves cover about 70% of the gap. Japan, South Korea and India have pulled back another 3.6 million bpd combined.
"The U.S. and China are providing important forms of adjustment to compensate for the export disruption from the Persian Gulf," Deutsche Bank's Michael Hsueh wrote this week. That's likely why Brent hasn't run to $120 a barrel, he said.
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The question is whether either side can keep this up until the strait reopens.
China is in a better spot. As of December 2025, it held 1.4 billion barrels in its strategic reserve. That's the largest in the world.
Morgan Stanley's Martijn Rats told clients China could last for months. That's true even if its inventories fall by several million barrels a day.
The U.S. is in tougher shape. Its export surge is coming mostly from inventories, not new output. The U.S. reserve holds 413 million barrels, the world's second-largest. The Trump team agreed in March to release 172 million of those barrels.
"The ability of the U.S. to continue this elevated level of exports is hard to gauge but appears under more pressure," Rats said.
Energy Secretary Chris Wright told CNBC at Port Arthur, Texas on Friday that China will keep buying more U.S. oil. "There's a natural energy trade there," he said.
Trump told Fox News China has already agreed to import more U.S. crude. Beijing has not confirmed any deal.
The Trump-Xi summit in Beijing this week produced a White House statement that the Strait of Hormuz "must open" to allow energy flow. There is no timeline.
Two numbers are worth tracking. The first is how fast U.S. reserves draw down. The second is what Beijing actually buys versus what Trump says was agreed.
The pump that's holding oil prices steady is running on inventory, not new oil.
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