There’s one good reason oil prices have never roared quite as loudly as they could have during the Strait of Hormuz crisis: China. The People’s Republic slashed its imports of crude oil and drew from its huge stockpiles. Now, though, it’s diesel that’s in short supply, sending shockwaves through the economies of the US and Europe. Could China ride to the rescue again?
In theory, yes it could. The reason diesel is in short supply globally is because facilities that are available to refine crude oil into the preferred fuel for trucks, buses and trains are already running at full tilt. Many Russian refineries, formerly outsized producers of diesel, have been taken offline owing to attacks by Ukraine.
China, though, has ample spare capacity. Even before the US began its war with Iran, China had more refineries than it needed to supply its own domestic needs of oil-derived products. Its cuts to crude imports and product exports have left many plants half idle; in aggregate the 13mn barrels a day they are producing is 2.3mn barrels fewer than last February, WoodMackenzie estimates.