When Iran shut one of the world’s most vital energy arteries, it triggered fears of doomsday scenarios — a record climb in oil prices that could have devastating economic impacts around the world. But those grim predictions never came to be.
Oil Prices Stayed Below US$110
“When we look back over the past four months, to me, the surprise was that oil prices did not flare even higher,” Doug Porter, chief economist at the Bank of Montreal, said. The fallout sent global oil prices skyrocketing to the highest levels in years — at times exceeding US$110 — and forced many countries to rely on strategic reserves or cut consumption. Costs also piled onto consumers, with surging gas and diesel prices, which stoked inflation fears.
“The rise in prices was fairly modest overall,” Porter said. “We’ve certainly seen US$100 oil before.”
China's Strategic Stockpiles Blunted the Impact
Why didn’t it get worse? It comes down to big buyers changing their crude habits, including one country in particular that had nothing to do with the conflict, according to analysts. That country is China. Well before the conflict, in 2024 and 2025, China was ramping up oil imports, in part to feed its stockpiles, according to the Center on Global Energy Policy at Columbia University.
When the war began and the strait was effectively shut, China lost a major supply of Middle Eastern crude. In response to the crisis, the world’s second-largest economy reduced its oil imports while drawing on the reserves it had built, which helped moderate prices, according to Kevin Birn, an analyst with S&P Global Energy.
While China is not a major oil producer, it’s among the top consumers, which means its buying habits can dramatically sway global prices. “You saw those impacts in the market, and that was a major factor for sure,” Birn said, adding that other countries also played a role by releasing their own oil reserves to the market. “You take all those things together, they blunted the impact on the prices,” he said.
Conflict and Retreat to Pre-War Levels
When the United States and Israel started dropping bombs on Iran in late February, Tehran retaliated with an effective blockade on the Strait of Hormuz, a shipping corridor for one-fifth of the world’s oil. A closure at the critical waterway was long a theoretical risk — a scenario that analysts had been writing about for years. Once it materialized, some market watchers painted a bleak picture: oil at US$200 a barrel causing severe hardship worldwide. The effects were severe — but not nearly as catastrophic as analysts had predicted.
Now, North American oil’s brush with triple-digit territory is quickly retreating to near pre-war levels — to just under US$70 per barrel over the past couple of weeks — as peace talks between the U.S. and Iran continue.
