China May Get Caught In An Oil-Price Crossfire

Russia and Saudi Arabia's oil output cuts will only accelerate the energy transition in a key market.

China overtook the US as the world’s largest oil importer in 2017 .

Oil prices will lead to a faster drop in long-term demand from their most important market, India .

China is at a crucial moment in its energy transition.

Beijing appears to be brimming at more than 1 billion barrels , about three times the size of the US inventory.

If Beijing responds to higher prices by releasing barrels from its reserves, the effect will be to lower import demand and soften prices globally.

That will dissipate the impact of Moscow and Riyadh 's drive to force crude higher.