China has pulled off probably the biggest surprise of the Iran war — and it's confounding commodity analysts.

Why it matters: Since the start of the conflict, China has sharply cut the amount of oil it imports — and that has kept a lid on global oil prices.

The big picture: "If Chinese imports had stayed at prewar levels, oil prices would almost certainly be significantly higher today," says Salih Yilmaz, a senior oil analyst at Bloomberg Intelligence.

• The country "has probably been one of the single biggest reasons oil prices didn't spike much higher during the Hormuz disruption."

The intrigue: How has China done it? "China's inventory system is very opaque," Yilmaz says.

• Analysts mostly track visible tanks and tanker flows, but China's massive underground Strategic Petroleum Reserve and other stockpiles are much harder to observe, he says.
• China is reportedly still managing to buy some Iranian barrels.

State of play: Since the war began, the Strait of Hormuz has effectively been shut — cutting off 20% of the world's supply of oil.

• While oil prices are now much higher, they are nowhere near as high as predicted at the outset of the conflict.

The latest: Brent crude, the global benchmark, is trading around $92 a barrel this morning on hopes for a ceasefire extension.

• That's a rise of 30% since the start of the year. But analysts were forecasting $200 a barrel in a prolonged conflict.

Zoom in: Before the war, China was importing about 11 million barrels of oil per day. In April, that number was 9.3 million, writes Michal Meidan, head of China Energy research at the Oxford Institute for Energy Studies, in a new report. May and June numbers are expected to fall to 6.5 million.

• That reduction has kept global oil demand in check and reduced upward pressure on prices.
• China did this without any observed release from its oil reserves.
• The government is allowing refiners to draw down stockpiles from commercial reserves. But visible stocks have only inched down since March, she notes.

How it works: China has pulled other levers to deal with the shortfall.

• It has stopped aggressively buying oil to build rainy day stockpiles.
• Oil refineries have cut the amount of crude they're processing and changed the mix of what they produce.
• They're using coal to produce certain chemicals instead of oil.
• China temporarily banned exports of certain refined oil products.

What to watch: How long China can keep this up without meaningfully drawing on its reserves or resuming the import of more oil.

Reality check: Global oil inventories are being drained at a record pace, the International Energy Agency warned earlier this month.

• Just yesterday, an Exxon Mobil executive said: "We're approaching unheard-of-inventory levels."

Between the lines: China has been operating for a while like a doomsday prepper, to borrow an analogy from Soumaya Keynes and Chad Bown's new book, "How to Win a Trade War."

• The country has been stockpiling reserves and building capacity to store oil in case of a crisis.
• China buys a lot of oil from Iran and has watched for years now as U.S. sanctions have drawn tighter and tighter around its ally.
• Last year, China was buying so much oil for its reserves that it was propping up global prices, Rystad Energy analysts wrote in a note in September 2025.
• It's a sharp contrast to the U.S., which failed to top up its strategic oil reserve when prices were low last year.

The bottom line: China has crude leverage.

Snowflake escaped the market's software-stock penalty box after posting earnings results, even as traders shrugged off the numbers from fellow software stalwart Salesforce.

The big picture: Software shares have struggled, as investors bet AI will undercut the previous profitability of software-as-a-service (SaaS) companies.

State of play: Snowflake's surge yesterday proves that it's possible — though not easy — for such stocks to get back into the market's good graces.

By the numbers: Both Snowflake and Salesforce reported better-than-expected quarterly sales and profit numbers after the market close on Wednesday.

• Indeed, both had earnings that were more than 20% higher than Wall Street forecasts, according to FactSet.

The intrigue: Yet, shares of Salesforce fell 0.8% yesterday, while Snowflake romped nearly 37% — its best day since going public in 2020.

Zoom in: Salesforce's $11.3 billion revenue outlook for next quarter was short of analysts' estimates, which helps explain the market reaction.

• Snowflake's full-year product sales guidance of $5.84 billion, meanwhile, was stronger than what Wall Street expected, due to its expectations of continued growth of its Cortex Code product.

Yes, but: There was another big difference.

• Snowflake also announced a five-year contract to buy $6 billion in computing capacity from Amazon Web Services, effectively giving it access to lower-priced AI infrastructure.
• That deal can help Snowflake preserve some of its profit margin, even as more of its sales are driven by AI activity, such as Cortex Code. (AI products typically have lower margins than traditional cloud computing, because of the costs of computing power.)

How it works: "Lower bandwidth costs," Snowflake CFO Brian Robins told an analyst who asked about the company's ability to maintain its 75% adjusted product profit margin. "I talked about the AWS contract, and so we're offsetting it there. So that's how we're able to do that."

The bottom line: Snowflake is providing a template for a play that other software companies can run: Simply create a fast-growing, AI-related product and simultaneously commit to preserving high profit margins.

• That's easier said than done.