The latest broadside fired by China in its trade war with the United States was a list of $16 billion in American imports subjected to a 25 percent retaliatory tariff. One major item that was supposed to be on the list was quietly removed: oil. Analysts wonder if this conspicuous omission is a sign China is blinking in its economic staredown against the Trump administration.

The Wall Street Journal noted on Thursday that oil was prominently listed as a target for retaliatory tariffs in June at a time when Beijing was trying to intimidate President Trump out of taking punitive measures against Chinese imports. A 25 percent tariff on American oil was a serious threat because China is now the world’s top buyer of U.S. crude. U.S. oil imports to China are worth $8 billion all by themselves, so erasing oil from the tariff list reduced the value of sanctioned goods by roughly one-third.

That is a massive revision to China’s retaliatory action, tantamount to stubbing someone’s toe after threatening to punch him in the nose.

The WSJ noted the Chinese Commerce Ministry did not explain the omission and would not answer questions about it, but the reason for backing down from oil tariffs is quite obvious:

Analysts and industry insiders said the change could signal that China is reassessing its bluster, given its slowing economy, the ease with which crude sellers can find new buyers—and, most of all, its climbing reliance on foreign oil. China depends on imports for 70% of its energy needs, and the International Energy Agency forecasts that will climb to 80% by 2040. “China would be shooting itself in the foot if they tax [crude oil] imports,” Shane Oliver, an analyst at AMP Capital Markets, said. “China’s economy is heavily dependent on oil.”

“Simply put, crude may have been a bluff – and LNG could be too – and energy scarcity may have led China to retreat from its threat posture,” Managing Director Kevin Book of ClearView Energy Partners said in a Wednesday memo quoted by S&P Global.

China imports far more oil from Russia and Saudi Arabia, but the Chinese economy simply is not in shape to absorb a huge price increase on the rapidly growing volume of crude purchased from American suppliers.

The Wall Street Journal explained that China and other Asian nations have been adapting their refineries to the type of oil America supplies, so the U.S. product is more important than its share of total Chinese oil imports would suggest.

Another factor in Beijing’s thinking could be that American oil is just too strong right now for Chinese tariffs to have much of an effect. The June threat of 25 percent tariffs from Beijing caused Chinese imports to drop considerably in July and August, but other buyers took what China did not. These alternative purchases were made with such alacrity that tankers full of U.S. crude simply changed course from Chinese ports and headed for other destinations.

“Whether in the long or short run, China’s potential imposition of tariffs or quotas on US exports is a tax on Chinese consumers rather than an obstacle to US exports,” commodities chief Ed Morse of Citi told S&P Global.

Another piece of the puzzle is the relationship China is trying to establish with Iran. China wants to import more Iranian oil but does not wish to run afoul of U.S. sanctions on Iran set to resume in November as a consequence of President Trump’s pulling out of the Iran nuclear deal.

“Adding a tariff to U.S. crude reduces the chance of the U.S. issuing them a waiver to buy Iranian crude. It risks aggravating the U.S. even further,” Dan Eberhart of Colorado drilling services company Canary, LLC told the Journal.

Analysts told S&P Global that China will apply for an exemption from Iran sanctions on the grounds that it desperately needs the oil it buys from Iranian sources. This argument would be much more difficult to make if China slapped tariffs on the oil it buys from the United States.

In fact, some analysts went so far as to suggest Trump’s renewed sanctions on Iran are blunting the effects of the trade war with China. It is an uneasy balance that probably will not last long, as fears of a global oil shortage mount, but the current mood among investors is making both the U.S. dollar and U.S. Treasury waivers from Iran sanctions more valuable.

Trump’s willingness to proceed with sanctions on Iran despite enormous pressure from Europe may also have convinced the Chinese he means business, prompting the country to recalibrate its response accordingly.

Unfortunately, trade war jitters threaten to slow down the global economy and reduce the demand for oil, which would hurt American suppliers as well as foreign producers. Oil is a volatile economic weapon, a financial grenade that detonates unpredictably after the pin is pulled.

Reuters reported on Friday that China’s state-run oil firms lobbied hard to have American oil removed from the tariff list, which is an interesting inversion of the typical “state capitalism” model of government setting goals for private industry espoused by Beijing.

Sinopec, the Chinese company that imports and refines the most American oil, suspended new bookings for months in fear of oil tariffs, which evidently sent a message President Xi Jinping could not ignore. At the very least, China’s oil industry was able to persuade its government to hold off on tariffs until it can take delivery on American products that have already been ordered.