China won’t waste its reserves to cushion oil price impact of Iran war

Dr Andy Xie is a Shanghai-based independent economist specialising in China and Asia, and writes, speaks and consults on global economics and financial markets.oil prices are set to rise once more as renewed US attacks on Iran leave the Strait of Hormuz, a major artery of oil trade, closed again. With US strategic petroleum reserves at their lowest in over 40 years, America will have trouble keeping oil prices below US$100 a barrel, as it has mostly done in the war so far.Analysts warn that sustained oil prices above US$100 risk accelerating inflation, depressing consumption and inviting recession. They have also turned their attention to China and its ability to cushion oil prices.China is the world’s largest oil buyer and its strategic petroleum reserves – which are not publicly declared, unlike America’s – are thought to be among the world’s largest. Since April, China has been cutting imports by 3.5 million barrels a day, helping to keep a lid on prices.