In the early days of the Iran war, analysts held the grim prediction that crude oil prices would top $200 a barrel, nearly triple pre-war prices. But more than three months into the conflict, their fears have not materialized, and analysts have China’s trade activity to thank for it.

“As the conflict enters its fourth month, one development stands out: prices have become remarkably calm,” JPMorgan analysts wrote in a note this week.

Oil prices hovered around $94 a barrel on Wednesday following President Donald Trump’s announcement that Iran will “pay the price” for its laggard progress in brokering a peace deal. Wednesday’s oil price is still below the $104 per barrel from a month ago.

China’s plummeting imports have effectively shielded oil prices from increasing, analysts said. The effective closure of the Strait of Hormuz, through which about 20% of the world’s oil supply is traded, has created the largest energy disruption in global history. But China’s reliance on its strategic oil reserves, with its total stockpiles touching 1.4 billion barrels, has helped steady what could be a crisis of even greater magnitude.

The country has gone from importing around 11 million barrels a day on average for the last five years to about 7.8 million barrels a day in May, according to customs data—its lowest levels in nearly a decade. China’s import reduction makes up about 74% of the world’s decrease in global crude oil trade, according to the JPMorgan note.

Societe Generale analysts led by Mike Haigh, head of FIC and commodity research at the bank, noted China as the market’s “key rebalancing force.” In a note published on Monday, analysts noted today’s 14% loss in global crude supply as a result of the Strait of Hormuz closure has increased prices about 30%. By comparison, the 1973 OPEC oil embargo disrupted 7% of the global crude supply, yet prices skyrocketed by more than 130%.

How long can China cushion energy costs?

China’s ability to help keep oil prices lower may be limited, however.

Michal Meidan, head of China energy research at the Oxford Institute for Energy Studies noted in a recent report that Chinese stakeholders appeared to correctly guess how much apply they need to maintain economic operations.

China may have learned this lesson the hard way. In late 2021, the country saw an energy crisis as a result of a global coal shortage. Chinese power companies lost money not only because of high prices, but also because the Chinese government capped how much they were able to charge consumers for electricity. As a result, power plants shut down, and China suffered severe power outages.

China has since poured investments into electrification, as well as oil and coal reserves, but Meidan questioned how and when Chinese stakeholders will make decisions on managing the country’s strategic oil reserves.

“How low could imports (and refinery runs) go before China must tap into its stocks more meaningfully or resume crude buying even at higher costs?” Meidan said in the report. “What does this mean for product supplies and to what extent can coal-to-chemicals offset the loss of oil-based chemicals? And what is driving these decisions?”

There are also other variables counterbalancing rising energy prices, Societe Generale noted, including an apparent willingness for the U.S. to continue to export oil, as well as evidence the Strait of Hormuz is actually allowing greater passage to shipping vessels than initially estimated. But regarding these exceptions, the analysts warned, energy costs will not remain depressed should the conflict continue.

“The market will require higher prices to restore balance,” Haigh wrote. “Several structural pressures are pointing in the same direction: strategic reserves will need to be rebuilt, inventories are unlikely to remain comfortable without incremental supply, and new production requires stronger returns to move forward.”