The Iran war has revealed China's enormous power over global oil prices, thanks to its position as the world's largest buyer.

Why it matters: China's reaction to the oil shock — by substantially withdrawing from buying on world markets — helped prevent the worst of the price spikes that experts thought would follow from the effective closure of the Strait of Hormuz.

Catch up quick: After the U.S. and Israel launched the war on Feb. 28, Chinese crude oil imports dove as prices spiked.

• At first, the decline in imports didn't surprise analysts. (China has long been known as a price-sensitive buyer.)

Yes, but: Few expected that China could maintain this low level of oil buying without deeply damaging its domestic economy.

• But as the war approaches its sixth month, China has done just that.

By the numbers: Through June, Chinese oil imports remain down over 40% from the previous year.

• "I guess the surprise has been just how low Chinese demand can go," said Michal Meidan, head of China energy research at the Oxford Institute for Energy Studies. "But it's been low without impairing the well-functioning of the economy."

How it works: Chinese policymakers have pulled several levers to mitigate the impact of the decline in oil imports, Goldman Sachs analysts say.

• Chinese officials tapped into domestic reserves of coal, oil and natural gas for supplies.
• They boosted usage of coal and renewables, where the country is less reliant on imports.
• And China took advantage of its giant fleet of electric vehicles, reflected by the fact that "despite much lower gasoline consumption, traffic congestion remained relatively stable," Goldman analysts say.

The big picture: Broadly speaking, analysts say that China has taken such steps almost exclusively for the benefit of its domestic economy. But the benefits of those decisions — basically lower global oil prices — have been broadly shared.

Caveat: China isn't the only reason that the world economy was able to deal with the energy supply disruptions of the war.

• Rich nations released large amounts of oil from their own strategic reserves.
• And U.S. energy companies drastically boosted exports to meet global demand.

Connect the dots: Still, China's energy policy — and its ability to keep global prices in check — could be a valuable asset as it positions itself as a source of stability, often in contrast to current U.S. leadership.

• "China is doing this for China, fundamentally," said Ruby Osman, a senior policy adviser on China at the Tony Blair Institute for Global Change. "But obviously it's not unhelpful for China that it has become a global public good."

What we're watching: Any hints that Chinese buyers are flocking back to global markets. Early indications suggest a bit of a bounce in July purchases.

As AI expenses bite, Meta's second-quarter free cash flow fell to its lowest since just before the social media giant launched its layoff-laden "year of efficiency," the company reported yesterday.

The big picture: The AI boom is transforming major tech giants from asset-light, cash-spewing behemoths into indebted owners of a sprawling fleet of super-expensive data centers. And nobody knows whether those data centers will eventually turn out to be profitable investments.

The intrigue: That rapidly changing financial reality is why the bond markets are starting to show signs of concern about the size of the bets these companies — once thought to be virtually invulnerable — are making.

Zoom in: Free cash flow provides one of the "cleanest" snapshots of how a company is actually doing, as measured by the real dollars that end up in its coffers.

By the numbers: The cost of Meta's massive AI investment binge is beginning to bite.

• It reported $30.12 billion in purchases of property and equipment, plus another $962 million for lease payments.
• Combined, that ate deeply into the $31.86 billion the company's operations produced during the three months ending on June 30.
• As a result, free cash flow was just $784 million during the quarter — the lowest since the company could only cough up $173 million in free cash in the third quarter of 2022, when Zuckerberg & Co. was still focused on its Reality Labs division. Remember the Metaverse?
• Meta's shares fell sharply in after-hours trading yesterday, following the release of its Q2 report.
• Meta isn't alone. Google's parent Alphabet also reported that its free cash flow actually fell into negative territory for the first time on record in its most recently reported quarter.

Yes, but: Not all tech giants are the same. Microsoft posted strong quarterly results and showed free cash flow of around $20 billion during its most recent quarter, also reported yesterday.

• Its shares jumped after hours.