How has the six-month U.S.-Israeli war with Iran and the resulting effective blockade of the Strait of Hormuz transformed global oil-market power in 2026—given that OPEC+’s share of global output has fallen from more than 48% to about 40% (with its core seven producers, including

The war has inverted the usual oil-market hierarchy: OPEC+ still controls large volumes underground, but the Hormuz blockade has curtailed its ability to turn production policy into export supply. China, able to cut or resume enormous purchases, has become the effective short-run balancing force—while U.S. inventories and emergency-policy capacity give Washington added influence. 71314

• OPEC+ has lost operational, not merely statistical, power. Its share of global output reportedly fell from more than 48% before the war to about 40% in July; the seven-producer core was only roughly one-quarter of world supply. UAE’s withdrawal accounts for a material part of that fall, but the deeper problem is physical: output increases mean little when Gulf barrels cannot reliably reach customers through Hormuz. 101314

• That is a sharp contrast with 2019. Then, OPEC+—especially Saudi Arabia—could credibly tighten or loosen delivered supply, and its spare capacity gave it substantial price-setting leverage. In 2026, it can announce quota increases, but constrained export routes, damaged infrastructure, and costly shipping have broken the link between a production decision and actual seaborne availability. 714

• China has become the “swing demand centre.” Its roughly 400-million-barrel year-on-year reduction in purchases has offset a meaningful share of the barrels trapped behind Hormuz. This demand destruction—or demand restraint—has capped prices despite a supply interruption described as unprecedented: at the peak, about 13 million barrels per day were stranded, yet Brent’s March spike to about $118 a barrel had receded near pre-war levels by early July. 4513

• The mechanism is broader than a tactical import cut. Beijing’s fuel-export restrictions, weaker refinery runs, use of stockpiles, and accelerating EV adoption reduce the oil system’s call on imported crude. China’s June crude imports were 7.12 million bpd, down 41.3% year on year, while refinery processing fell 17.7%; those reductions relieved pressure on the diminished pool of available cargoes. 6

• China’s power reflects the reversal of its previous role. Before the war, its buying and stockpiling had been a major source of marginal global demand—estimates suggest it may have contributed around half of demand growth. Once that buyer retrenched, sellers faced a loss of demand large enough to counterbalance much of the Hormuz-related supply loss. 14

• July’s rebound should not be mistaken for normalization. A temporary summer ceasefire reopened enough shipping capacity for China’s Gulf imports to roughly double and for total imports to rise to 8.41 million bpd. But the rebound was aided by weak refinery throughput and modest stockbuilding, rather than a durable recovery in consumption; analysts expect imports to weaken again if security risks and the underlying policy constraints persist. 129

• The next phase is more volatile, not necessarily producer-dominated. Prolonged disruption would keep Gulf exporters export-constrained while making China’s procurement, stockpile releases, refinery policy, and fuel exports unusually consequential. At the same time, record-low U.S. distillate inventories make diesel and jet-fuel availability a potential price accelerant, increasing Washington’s ability—and incentive—to influence markets through strategic-stock releases, sanctions, diplomacy, and domestic supply policy. The result is a more buyer- and state-policy-driven market, though a renewed loss of Chinese restraint or a severe products shortage could rapidly restore upside price pressure. 414