Wall Street may have solved a nagging mystery in global oil markets as doomsday scenarios have yet to arrive

China has quietly emerged as the global oil market’s stealthy swing consumer, potentially holding off doomsday a while longer.

For months, investors wondered why crude oil prices failed to reach worst-case scenarios, even as a fifth of the world’s supply remained bottled up in Persian Gulf.

To be sure, Saudi Arabia diverted exports to bypass the Strait of Hormuz, economies in Asia imposed rationing, and the world’s biggest oil-consuming countries coordinated releases from strategic reserves.

But the efforts haven’t fully offset the missing Mideast oil, with the shortfall estimated at more than 10 million barrels a day. At the same time, the U.S. naval blockade on Iran removed took more barrels off the market.

As a result, the ongoing stalemate between the U.S. and Iran on reaching a lasting ceasefire deal that reopens the strait has stoked increasing panic from a growing chorus of voices.

“We’re approaching unheard of inventory levels,” Exxon Senior Vice President Neil Chapman warned at an industry conference on Thursday. “I mean really, really low levels. You can debate whether that’s going to hit those really low levels in two weeks or three weeks. Once you get to that point, then you’ll see price shoot up.”

Analysts have predicted the moment of truth —when global inventories reach critically low levels—could arrive as soon as June. But markets have less visibility into China’s vast stockpiles, which are estimated at around 1.4 billion barrels.

Meanwhile, China’s crude imports plunged 20% in April to 9.4 million barrels per day, representing the biggest drop since the pandemic, and data for May suggest a steeper dive to 7 million.