China Gains Oil-Market Influence as OPEC+ Weakens
Photo: KMG
Six months into the Iran war, OPEC+ has lost much of its ability to influence oil prices. Its share of global production has fallen sharply, while Chinese demand has become a major force in the market, Orda.kz reports, citing Reuters.
The conflict has effectively closed the Strait of Hormuz, a key export route for Middle Eastern oil, and damaged energy infrastructure in several OPEC countries.
Since March, the alliance’s leading members have announced six production increases. Most remained largely on paper because producers could not ship the additional oil. The exception came during a brief US–Iran ceasefire in July, when hopes of reopening the strait affected prices.
Traders once focused on how much oil OPEC+ chose to produce. Now the main question is how much its members can physically extract and export.
OPEC+ Share Falls
OPEC+ accounted for around 40% of global oil production in July, down from more than 48% before the US and Israel attacked Iran in late February.
Around four to five percentage points of that decline resulted from the United Arab Emirates leaving OPEC in May. The alliance’s seven leading producers, including Saudi Arabia and Russia, now account for only a quarter of global output.
China Becomes the Swing Buyer
China has purchased around 400 million fewer barrels since the war began than during the same period last year. Reuters linked the decline to lower refinery output, restrictions on fuel exports and the continued spread of electric vehicles.
The fall in Chinese demand has prevented oil prices from rising even further despite severe supply disruptions. Analysts now describe China as the market’s “swing demand centre” — a role previously associated with OPEC+ producers.
What It Means for Kazakhstan
Kazakhstan does not export oil through the Strait of Hormuz, so the blockade does not directly restrict its shipments. However, the country remains exposed to the resulting price volatility.
Weaker Chinese demand could keep global oil prices under pressure, reducing Kazakhstan’s export revenue and budget income even though most Kazakh crude is sold to European buyers.
The weakening of OPEC+ may also reduce the practical effect of its production decisions. Kazakhstan remains a member of the alliance and is still formally bound by its quotas, despite repeatedly producing above agreed levels.
In May, the Energy Ministry said that Kazakhstan had no plans to leave OPEC+.
Original author: Alexander Zhdanov
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