The US war on Iran has triggered the biggest oil supply shock in history.At the height of the disruption in April, up to 20 million barrels a day were being taken out of the global supply chain.But we never hit the critical $150-a-barrel tipping point. At that level, things tend to go pear-shaped.We get what economists call “demand destruction”, with consumers and businesses being forced to curtail consumption, triggering a negative chain reaction across the economy.We have been spared this fate by an unlikely source: China.Between February and June, Beijing slashed its crude oil imports by almost half, equivalent to 5.5 million barrels a day.Experts reckon this reduction in demand has kept the price of Brent crude oil, the global benchmark, down by at least $30 a barrel.China’s large position in the oil market means it is now a bigger determiner of price than the Organisation of the Petroleum Exporting Countries.How has the Chinese economy been able to function with half its normal oil intake? This is something of a mystery.One theory is China has been using the so-called dark fleet – a hidden network of tankers that secretly transfer oil from ship to ship in the middle of the ocean, obscuring its origins and evading sanctions in the process.According to one estimate, up to 19 per cent of tankers may be involved in this underground trade.Another explanation is the crisis has triggered a more aggressive pivot to renewables and a greater use of coal-to-oil alternatives.China’s top coal-producing region recently announced plans to build the country’s largest base for turning coal into oil as a hedge against volatile oil imports.The most cogent answer, however, is that China has fallen back on its own vast oil reserves.The US energy information administration estimates that China added an average of 1.1 million barrels per day of crude oil to its strategic reserves in 2025 and that its total reserve amounted to 1.4 billion barrels at the end of last year.China has a history of cutting back on imports when global oil prices rise. But the scale of the drop in Chinese imports this time around has been unprecedented, so the question is: how long is China prepared to absorb this global disruption?There has always been a suspicion that anti-China hawks in Washington might have been happy – initially anyway – to go along with Donald Trump’s ill-judged Iran policy to turn the screw on China. If the Iranian regime had fallen, then China’s anti-West coalition would have been diminished. Beijing would have also lost access to discounted Iranian oil, which accounts for roughly 13 per cent of its overall oil imports. This game of global brinkmanship sits in the background not just of the Iran conflict but of the US president’s Venezuela incursion also. China was the main importer of Venezuelan oil.The rivalry also runs through the Ukrainian conflict with Washington’s appeasement of Russian leader Vladimir Putin seen by some as an attempt to pull Moscow away from China.But the US attack on Iran – whether it was aimed at denuclearising, disarming or dethroning the regime (the objective was never clear) – has spectacularly backfired with an emboldened Tehran now seemingly calling the shots. Having a US military base in the Gulf has flipped from being an asset to a liability.From China’s perspective, hegemony in the region, Washington’s strategic objective, now seems to carry more burdens than benefits.Not for the first time, military misadventure in the Middle East has damaged the US’s global standing while aggravating cost pressures at home.Even if the Strait of Hormuz reopens soon, oil prices may not return to normal for some time because of the damage to infrastructure in region.Trump’s decision to back off militarily comes amid reports that the US is running dangerously low on munitions.According to sources cited by CNN, the US military has burned through nearly four-fifths of its THAAD interceptor missile inventory compared to pre-war numbers, and roughly half of its Patriot interceptors.Beijing may simply be content to watch the US flail about while focusing on what it sees as the real geopolitical contest: the battle for technological supremacy. China has recently agreed AI partnerships with 28 countries in the global south, a loose group of developing and historically poorer nations. As the old maxim goes: never interrupt your enemy when he is making a mistake.