However, this supply-side analysis ignores the largely unanticipated role played by demand. Conventional wisdom has long held that oil supply can be more easily and rapidly managed in a crisis than demand. That is because supply is, in part, coordinated by OPEC. Saudi Arabia, the swing producer and OPEC’s kingpin, was long seen as the central bank of oil. More recently, the United States’ ability (at least in the short term) to squeeze out more hydrocarbons during a crisis has also helped cool global energy markets.

Demand, in contrast, is dispersed among fractious market players, myriad countries, and billions of oil-guzzling consumers. When there is a demand response during an energy shock, it is usually chaotic and painful—a result of ad hoc policies, price spikes, shortages, and rationing. There is evidence of this during this crisis, too, in the hardest-hit places, especially in Africa and Asia, where the poorest consumers have suffered the most.

The World Bank’s June 2026 Global Economic Prospects report, for example, found that the Iran war had compounded longtime economic fragilities in Bangladesh, negatively affecting the country’s external balance and widening its fiscal deficit. In Nigeria, the war has reportedly caused fuel prices to spike by nearly 50 percent, intensifying inflation just as political campaigning for the 2027 general election begins.

It was widely assumed that mobilizing a coherent and calm demand response quickly in a crisis was nigh impossible—until now.

China, with its centralized energy planning and long-standing paranoia about the vulnerability of oil imports, has proven that wrong. Astonishingly, it cut seaborne imports of crude oil by more than five million barrels per day through June—over 40 percent below prewar levels—without precipitating an economic calamity at home. (China’s National Bureau of Statistics noted steady GDP growth between the first and second quarters of 2026, despite the ongoing energy disruption.) One way China did this was by dipping into its enormous strategic reserves, which it had built up when oil was relatively inexpensive, and relying temporarily on domestic coal and renewables to offset lost imports. Another way involved restricting product exports, to the chagrin of its customers abroad. Most intriguingly, Beijing curbed domestic demand for fossil fuels through policies that boost alternative vehicles, energy conservation, and public transportation.

That points to the larger lesson. Demand, sometimes called the “forgotten fuel” [PDF], can play a far greater role in energy management than imagined by policymakers who reflexively reach for supply-side solutions during times of crisis. This argument was made eloquently by Amory Lovins precisely fifty years ago, during an earlier era of Middle Eastern wars and energy shocks, in a seminal Foreign Affairs article titled “Energy Strategy: The Road Not Taken?”

also see https://responsiblestatecraft.org/iran-war-oil-prices/