Why Oil Prices Are Below $100 Despite the Largest Supply Shock in History

Brent crude spiked to $138 a barrel in April after the Strait of Hormuz crisis removed roughly 14 million barrels per day of Gulf production—what the International Energy Agency calls “the largest supply disruption in the history of the global oil market.” Yet prices have since retreated into a $95–$110 range and have even dipped below $100 for sustained periods. The apparent paradox has a straightforward explanation, and it begins in Beijing.

Speaking Tuesday at the Atlantic Council’s tenth annual Global Energy Forum in Washington, D.C., U.S. Energy Secretary Chris Wright offered a sobering timeline. Shipping traffic through the strait is “rising very meaningfully,” he said, but full normalization will take “many months” . The conflict has crippled the waterway for roughly three months, and despite a fragile ceasefire, no final agreement with Iran to fully reopen the strait has been reached . Wright also noted that the disruption extends beyond oil and gas to include sulfur, helium, lubricants, and other critical products .

At the same time, Wright acknowledged that energy costs have not yet risen enough to trigger significant demand destruction . That restraint comes from three temporary forces.

China’s collapsing imports: a 4-million-barrel-per-day buffer

The single biggest factor keeping prices in check is China. The world’s largest crude importer has slashed seaborne purchases to about 6.7 million barrels per day in May—the lowest level in a decade, according to data from Kpler . Before the war, China was importing roughly 11 million barrels per day . That 4-million-barrel-per-day drop has effectively absorbed a massive portion of the lost Gulf supply, shielding global markets from a far worse price spike . Analysts at Société Générale have called this demand-side reduction the single most powerful price cap at work .

China’s pullback is partly intentional. Beijing has drawn on enormous domestic crude stockpiles—estimated at roughly 1.4 billion barrels, enough to cover lost Middle Eastern imports for six months —rather than chase scarce and expensive cargoes on the spot market. Chinese refineries have also cut runs significantly, with throughput falling roughly 1.8 million barrels per day year-on-year .

Strategic reserves: the temporary supply bridge

The United States committed to releasing 172 million barrels from its Strategic Petroleum Reserve in March, a process unfolding over approximately four months . China is also believed to be quietly injecting crude from its strategic reserves into the domestic market, a move energy analyst Rory Johnston argues helps explain the subdued price action . Together, these coordinated releases have injected enough supply to prevent a runaway rally despite the ongoing production shut-ins .

The IEA orchestrated a broader coordinated release of 400 million barrels from member-country reserves—the largest in its history—though that move did not immediately lower prices when announced in mid-March .

Why analysts say this calm won’t last

The current equilibrium is precarious. Brent crude has traded in a “relatively contained range around $95–110 per barrel” rather than exploding past $150 . But every pillar supporting that range is temporary:

• China’s import cuts are reversible. Once its economy regains momentum or its stockpiles are drawn down, a return to the market could trigger a sharp price surge .
• Strategic reserves are finite. The U.S. SPR and other national stockpiles cannot sustain releases indefinitely .
• Demand destruction has not happened. Wright himself noted that energy costs haven’t risen high enough to force a meaningful drop in consumption, meaning the price cap depends entirely on engineered fixes rather than genuine market balance .

As one analyst summary put it, “Depleted reserves are likely to drive prices up in the long term” .

For now, the world is living on borrowed time—and borrowed barrels.