Bi-Weekly Geopolitical Report – The Geopolitics of China’s Energy Policy (September 28, 2026)
by Bill O’Grady | PDF
In our Asset Allocation Bi-Weekly from June 15, 2026, Confluence’s Chief Market Strategist Patrick Fearon-Hernandez discussed China’s unexpected decline in oil imports. That decline is one reason why the blockage of the Strait of Hormuz due to the war in Iran didn’t lead to a catastrophic rise in oil prices, at least so far. In his report, he noted that analysts are not sure exactly why China’s imports fell. Beijing treats its oil inventory data as a state secret, so we don’t know if it was oil inventory drawdowns or some other factor that led to the slide in imports.
In this report, we first outline the importance of the Strait of Hormuz, update the information that we have, and focus on the geopolitical ramifications of China’s actions. We examine China’s behavior in a broader context and discuss whether that behavior portends similar effects on other commodity markets. As always, we conclude with market ramifications.