If Iran decides to close down the strategic Strait of Hormuz, China could face severe energy supply disruptions, analysts have observed.
China to Face Major Blow As Global Oil Markets Witness Disruption
The Israel-Iran conflict will largely threaten the global oil market; however, observers believe that China could face the major blow if the war spills over.
Over the past week, Israel has targeted Iran’s defense infrastructure. Israel has warned that it would target Iran’s energy infrastructure if it continues to enrich uranium to nuclear grade levels. If such a situation arises, Iran will likely close the strategic Strait of Hormuz, threatening the global oil supply.
China, which is a manufacturing hub of the world with a $19 trillion economy, relies heavily on coal, natural gas and crude oil for its production chain. In 2024, China was the world’s largest consumer of energy and the second-largest consumer of oil, only behind the United States, according to the London-based Energy Institute.
Also Read: Can Iran Really Shut The Strait Of Hormuz And Disrupt Oil Trade? Global Ramifications Explained
Where Does China Import Oil From?
On paper, China has not imported any oil from Iran last year, as the country is under US sanctions for allegedly assisting Iran’s secret oil trade in defiance of European Union and US sanctions. However, reports claim that Iran exports large amounts of oil to China delivered via unofficial channels like transshipment, which ends up in the country’s smaller independent refineries.
As Iran is unable to sell its oil to the global markets due to sanctions, the country exports over 90 percent of its crude oil to China at cheaper rates. The crude oil is delivered to China via transshipment points such as Malaysia, energy experts believe.
China receives most of its oil from the neighboring and ideologically aligned country, Russia. In 2024, it also received shipments from Saudi Arabia, Iraq, Oman, the United Arab Emirates, Kuwait and Qatar. According to energy analysts, Russia and the gulf West Asian countries, barring Iran, together accounted for over half of China’s oil imports.
Will Iran Put Global Crude Markets in Disarray?
On the other hand, the US imported most of its crude oil from Canada. It also bought from Saudi Arabia and Iraq, which were among its top 10 suppliers. These countries only accounted for around 8 percent of its oil imports.
Energy markets are reeling after President Donald Trump called on Iran for “unconditional surrender.” The oil prices can further spike if Iran follows through on its warning to close the Strait of Hormuz. The strategic waterway links the Persian Gulf to the Gulf of Oman, which is just 21 miles wide at its narrowest point.
Nearly 20 million barrels of crude oil flow through the Strait of Hormuz each day, according to the Energy Information Administration.
Bad Days For China Ahead
As Israel continues to puund Iran and Tehran retaliates with missile strikes, oil prices continue to rise. West Texas Intermediate crude, which is a US price measurement, witnessed a five-month high, trading at $76 per barrel. Similarly, the international standard Brent crude reached a four-month high, trading at $77 per barrel.
A major conflict that cuts off supply lines from the region could result in a global economic shock that sends oil above $100 per barrel. Prices last reached that point in March 2022, after Russia’s invasion of Ukraine.
According to reports, China is planning to build up crude oil stockpiles by refining less than it buys and it produces. If the situation worsens, Beijing might turn to Russia and export more oil, directly benefitting the Kremlin.
Also Read: US, Iran Hold Direct Talks, Tehran Demands Israel Halt Strikes, Rejects US Nuclear Proposal
