The Oil War Nobody Is Calling a War
Something is happening in the oil market right now that the headlines are not explaining to you.
Three wars are running at the same time. Ukraine and Russia. The United States and Iran. And a third war in Sudan that almost nobody is talking about. Three ceasefires have been declared in the last two weeks. All three are already broken, or were broken the moment they were signed. Underneath all three, the same machine is running.
I want to walk you through that machine today, because once you understand how it works, the news stops being confusing. The confusion is the product. Clarity is the goal of this piece.
Three wars, one playbook
On April 11, Russia and Ukraine agreed to a 32-hour Easter ceasefire. Within hours, Ukraine reported more than 2,000 Russian violations. Russia reported almost the same number against Ukraine. The ceasefire lasted long enough to make a headline and not long enough to save a single life.
On April 8, the United States and Iran agreed to a two-week ceasefire mediated by Pakistan. By April 10, Airbus satellites photographed Iranian dump trucks clearing the entrances to sealed missile tunnels. Half of Iran’s ballistic missile launchers are still intact, hidden inside mountains. Call that a construction schedule, not a ceasefire. Iran is using the pause to dig out the weapons the American strike buried.
In Sudan, there is no ceasefire at all. Since January, around 700 civilians have been killed by drone strikes. 80 percent of the children killed in Sudan in 2026 have been killed by drones. Sudan gets almost no coverage. Why? Sudan has no oil chokepoint. No market premium. No way to convert suffering into a price signal. The absence of a price is why the world is not watching.
That is the first layer of the machine. Cheap drones have made war affordable. An FPV drone costs $500. An Iranian Shahed costs $20,000. A Tomahawk cruise missile costs $2 million. When the cheapest weapon can destroy the most expensive target, wars no longer end because somebody runs out of weapons. Both sides can keep flying forever.
The second layer is chokepoints. Every modern conflict sits on top of a chokepoint now. The Strait of Hormuz carries 20 percent of the world’s oil. The Black Sea corridor carried 45 million tons of Ukrainian grain before it collapsed. Sudan’s war sits on the last overland trade route in North Africa. Every war now has a valve that turns violence into a premium on something the market needs.
The third layer is debt. War spending justifies borrowing that peacetime politics would never approve. The United States is rolling over $10 trillion in debt this year. The Pentagon asked for $200 billion extra just for Iran, on top of a $900 billion base budget. Global government debt is heading from 94 percent of GDP to 100 percent by 2029, according to the IMF. Each crisis justifies the next issuance. Each issuance funds the next crisis.
Cheap force. Chokepoints. Debt. Nobody designed this system on purpose. Everybody benefits from not dismantling it. That is the scariest part.
Hormuz — what actually happened
On April 8, Donald Trump announced that the United States was “permanently opening the Strait of Hormuz.” He then added, in his usual way, that Xi Jinping was going to give him a “big, fat hug” at their upcoming summit.
It sounds like a joke. It is not a joke.
The American Navy now has, in their own words, “maritime superiority in the Middle East.” That is a polite phrase for a naval blockade. American warships are sitting in the Gulf, and every tanker that wants to leave Iran with crude oil has to go past them. Some Chinese tankers are already testing the cordon. The United States Treasury has issued temporary waivers to let some pre-loaded Iranian cargoes through so the global market does not seize up.
The message is clear. The United States controls the water that 20 percent of the world’s oil has to cross. And roughly half of that oil is heading to one country.
That country is China.
Iran is not Venezuela
For the last ten years, every time somebody in Washington wanted to talk about a small oil shock, they used Venezuela as the example. I remember that conversation well. I watched Hugo Chávez, and then Maduro, take one of the richest countries in the world and break it piece by piece. When American sanctions finally hit Venezuelan oil, production crashed from 3 million barrels a day to somewhere between 700,000 and 900,000. The global market barely noticed. About one percent of world supply. OPEC made up the difference. The oil market yawned.
Iran is not Venezuela.
Iran produces 3.3 million barrels of crude per day, plus another 1.3 million barrels of condensate. That is 4.6 million barrels a day total. Against a global demand of about 104 million barrels, Iran is roughly 4.5 percent of world oil supply. Four times the volume Venezuela represented at its worst.
If the Hormuz blockade actually cuts Iranian exports, we are not looking at a managed inconvenience. We are looking at the largest oil supply shock in decades. And every one of those missing barrels was going to China.
China’s oil problem
China is structurally short on oil. They do not have shale. They cannot drill their way out of it. Their own state oil company projects that China will keep importing about 70 percent of its oil through the end of the decade. In 2024, Chinese crude imports averaged 11.1 million barrels a day, which is more than one-fifth of all the crude traded by sea in the entire world.
Of that total, about half comes from the Persian Gulf. Russia supplies another 20 percent. Both of those sources are under American pressure right now. Both at the same time.
Iran specifically, because of sanctions, has ended up selling about 90 percent of its oil to just one buyer: China. Chinese refiners buy it at a discount. Those discounted barrels are a big part of why Chinese manufacturing stays cheap. Cut them off, and the price of everything coming out of Chinese factories goes up.
The Hormuz blockade is not only about Iran. It is a pressure valve on Beijing.
Tungsten — China punches back
China is not sitting still. This is the part most commentary misses.
China has a counter-lever. It is not oil. It is tungsten.
Tungsten is a gray metal. Most people have never heard of it. You need it to make tank armor, artillery shells, missile tips, drill bits, and the high-temperature alloys inside jet engines. It is the metal that does the killing in modern warfare. And China controls roughly 80 percent of global mine production and more than 80 percent of the world’s downstream processing.
Starting in February 2025, China stopped being quiet about it. Beijing imposed export controls on 41 tungsten products. Over the course of 2025, Chinese tungsten exports fell about 40 percent. By January and February of this year, Chinese exports of ammonium paratungstate, which is the refined form that actually goes into weapons, dropped to effectively zero.
China did this selectively. Exports to the United States fell 94.8 percent. Exports to Vietnam fell 90.4 percent. But exports to the United Kingdom rose 172.6 percent, which tells you the supply is quietly being rerouted through allies. Japan and South Korea together now receive nearly half of all Chinese tungsten exports. That is not random. That is Beijing rewarding friends and punishing adversaries.
So when Trump and Xi sit down next month, the conversation will look like trade. It will actually be something else. The United States controls the water China’s oil has to cross. China controls the metal America’s weapons need to keep firing.
That is the setup. That is what the Xi-Trump summit actually is.
What happens next
The rest of this analysis, the price scenarios, the sectors that win, the sectors that lose, and the three specific dates I am watching on the calendar between now and the summit, is below. If you want the full picture, keep reading as a paid subscriber. The actionable half lives beyond this line…