As the war has wound down and the US and Iran continue ongoing negotiations, ship traffic through the Strait of Hormuz has begun to pick up, sending increasing amounts of oil to the global market that has been starved for it.

That might be a problem for the oil market, according to JPMorgan commodity strategists, led by head of commodities research Natasha Kaneva.

“Regardless of timing, one thing is certain: a wave of oil is about to enter the market,” the strategists wrote. “And here lies the paradox. The surge in oil supply is about to collide with a market that, at least for now, simply does not need it.”

Critically, a significant chunk of that demand destruction came — in a stunning turnaround — from China. Through 2025, China bought massive volumes of oil, far above the nation’s domestic need, helping to keep a floor under prices at a time when the world faced a major oversupply glut.

China’s sudden drop in imports, the strategists noted, allowed countries getting squeezed to find an international supply they could buy to keep their economies functioning.

Now, millions of barrels of oil locked in the Persian Gulf are flooding back into a market that has adapted, even as it loses its lead buyer. In fact, China’s internal oil demand dropped so sharply during the war that officials are reportedly examining whether the change was just a temporary war-driven adaptation or a more structural shift in fossil fuel consumption throughout the country.

“The barrels now exiting Hormuz increasingly have nowhere to go except China. But China is not buying,” the JPMorgan strategists wrote. “The immediate consequences are clear: the market is facing the risk of a temporary glut as trapped oil finally re-enters a system that has already spent months learning how to function without it.”

That’s not to say prices will plummet, the strategists cautioned. Chinese refiners are likely to reenter the market and begin buying once more, they said, and countries and private companies that emptied their stores to backfill the missing barrels will begin replenishing those stocks, buying oil off the market.

But both of those factors, the strategists wrote to clients, could take time to emerge as the market evaluates the state of supply into 2027. World oil demand is now expected to fall by 1.1 million bpd in 2026, according to the International Energy Agency, which has predicted a vast oil supply overhang into 2027.

“Much like a computer after a major crash, the oil market is attempting a system reboot,” the JPMorgan strategists wrote.