Global oil markets stabilize as China manages demand amid geopolitical tensions

Global oil markets have remained relatively stable despite geopolitical tensions between the United States, Israel, and Iran. Analysts suggest China played a decisive role in preventing a catastrophic price surge by reducing its crude imports by half following the onset of conflict. To stabilize the market, Beijing utilized state engineering, drawing from existing reserves and managing domestic demand and fuel sales, which allowed other nations to access available supply.

However, China’s intervention has created secondary effects, including deficits in diesel, gasoline, and kerosene, as well as market uncertainty due to a lack of transparency regarding its total crude reserves.

In Mexico, the impact of international price fluctuations is felt unevenly due to government tax protections. An analysis by Caraiva y Asociados shows that Premium gasoline users have seen costs rise by 11% in less than six months, as the IEPS tax stimulus provides less protection for this grade compared to Regular gasoline, which rose only 0.7%. Diesel prices in Mexico have also faced pressure; while consumer prices remained stable, the government subsidy was significantly reduced, with the IEPS for diesel dropping 69% during the period, leaving little fiscal margin to absorb further international price hikes.