China and the Iran War Oil Shock That Wasn’t

The biggest oil shock in modern history came and went without the catastrophe everyone expected. When Iran closed the Strait of Hormuz, analysts warned that oil could hit $200 a barrel, but the global economy avoided that fate.

The Trump administration has argued that the crisis was contained thanks to their aggressive action, but they may be taking the wrong lessons from the avoidance of that apocalyptic scenario.

What happened was the largest unexpected swing in global oil balances: China quietly cut crude oil imports by more than five million barrels a day. Yet there was no corresponding collapse in economic activity, no obvious drop in mobility, and no official explanation from Beijing. Somehow, China stopped buying oil from the rest of the world and started drawing from stockpiles we…