Theory, why is oil price so cheap ( see the Iran thread discussion we have had on questioning and wondering what is really going on )
China China China
Theory is that China has decided that it will control the demand by building a massive oil storage out and filling it with cheap oil ..
China Replaced OPEC — And Nobody Is Talking About It
This video, featuring
Troy W. Eckard of
Eckard Enterprises, explores how
China has positioned itself as the world's new "swing demand" player in the global oil market, potentially shifting power away from traditional supply-side influencers like
OPEC.
Key Takeaways:
- China's Massive Storage Strategy (1:37 - 2:35): Over the last decade, China has built enormous storage capacity—estimated between 1.2 and 1.5 billion barrels—which is roughly twice the size of the United States’ Strategic Petroleum Reserve.
- Control Through Demand (3:31 - 4:12): Unlike OPEC, which traditionally manipulates oil prices by adjusting supply, China exerts control by manipulating demand. By deciding to stop purchasing oil and instead relying on its vast stockpiles, China can force global prices downward.
- Market Manipulation Mechanics (4:56 - 6:02): By intentionally halting imports, China can create a temporary supply glut. Once prices drop significantly due to this lack of demand, China enters the market to purchase large volumes of oil at lower prices, effectively replenishing its reserves at a discount.
- Recommendations for the U.S. (6:32 - 7:35): Eckard argues that the United States should similarly invest in a much larger strategic storage capacity (1 to 3 billion barrels). This would allow the U.S. to buffer against OPEC supply shocks without forcing domestic producers to sell their oil at deflated prices during temporary market gluts.
Conclusion:Troy W. Eckard concludes that
China has successfully become the number one swing player on the demand side, fundamentally altering how global oil markets operate (7:35 - 8:25).
