Javier Blas writes:

Over the past decade, China has built the world’s largest oil emergency stockpile — a multi-layered cache of strategic and commercial reserves with more than a billion barrels.

Washington probably hopes that Beijing will convince Iran to soften its demands at the negotiating table, as it has done previously: In 2023, it brokered a deal between Saudi Arabia and Iran. But most of the leverage Beijing had over Tehran rested on the money it was paying for oil — which will end if the blockade halts exports. “The current ceasefire is highly fragile, with the region at a critical turning point,” China’s Foreign Minister Wang Yi said on Monday. “The immediate priority is to prevent a resumption of hostilities and sustain the hard-won truce.”

Rather than feel compelled to help achieve a lasting ceasefire, the Chinese Communist Party can take a wait-and-see position by relying on its reserves. Considering the amount of crude it has stockpiled — perhaps preparing for a rainy-day crisis around Taiwan — Beijing can afford to go without Iranian supplies for several weeks. Even a two-month embargo would only see China depleting its emergency reserves by about 10%.

In short, the oil math is skewed against the White House. The blockade has a slim chance of working. With apologies to John Maynard Keynes, Iran can remain defiant — and China unconcerned — longer than Trump can remain solvent. [Continue reading…]