Every thesis deserves an adversary, and this week our oil position got one in print. The Journal’s Heard on the Street column made the strongest argument against the energy call we have been making since May. We would rather print it than hide from it.
The Crash Diet
The claim is simple, and the evidence is not friendly to oil producers. “China is more in control of its oil consumption than anyone realized,” the column argues.
The proof came during the Iran war. When the Strait of Hormuz closed, the crude market’s biggest customer simply cut its imports by roughly 40%.
The arithmetic: China imported 11.6 million barrels of crude a day on average in 2025, per American Petroleum Institute data. By June of this year, imports had collapsed to around seven million barrels a day.
A single-country drop of that size has not happened before — not even during a major recession.
And it happened without one. China’s economy grew 4.3% in the second quarter. The country did not stop needing energy. It stopped needing to buy this particular kind, on the spot market, at these prices.
“The OPEC of Oil Demand”
“We tend to joke among ourselves that China is the OPEC of oil demand,” says Homayoun Falakshahi, head of crude oil analysis at Kpler.
That line inverts the assumption the whole market is priced on. OPEC used production quotas to move prices, and U.S. shale added supply once oil rose above roughly $65 a barrel. Demand was assumed to just sit there — you burn what you burn.
Not anymore. “The demand side can now influence the market and that is quite scary for suppliers,” says David Fishman of the Lantau Group, an energy consulting firm.
How long can Beijing stay quiet? Kpler data says China can comfortably suppress imports for another six months at its current drawdown rate — and still hold close to 1.1 billion barrels in storage.
How Beijing Built an Off Switch
This ability took years of planning to reduce dependence on overseas oil. More than half of all new cars sold in China in 2025 were electric. The country’s renewable build-out meant its AI companies were not scrambling for data-center power.
When the war began, Beijing restricted refinery runs and banned fuel exports, so refineries needed less imported crude and the home market stayed supplied. Consumers did the rest — more electric cars, more high-speed electric trains instead of flights.
There is a limit. Inventories sat at 1.07 billion barrels early last year when Beijing announced a major stockpiling drive — a threshold that could send it back to the market as a buyer, which would push prices up. But that is a floor under the market, not a ceiling on the strategy.
And this is the second straight year China has surprised the oil price. Last year, some analysts forecast $50 oil on a coming glut. The glut never came — because Beijing was buying crude to fill its tanks.
Same actor, opposite direction, twice in eighteen months. That is a swing consumer. Southeast Asia is now importing more EVs and solar panels since the war began, which suggests other countries are copying the playbook — more bad news for oil suppliers.