Global Oil Markets Shaken as Strait of Hormuz Remains Blocked, China Prepares for Supply Disruption

Escalating tensions in the Middle East have triggered a dramatic surge in oil prices and exposed vulnerabilities in global energy supply chains, particularly for China.

The continued closure of the Strait of Hormuz by Iran has significantly destabilized international markets for oil and natural gas, coinciding with a prolonged conflict between the United States and Israel. Following a pledge by President Trump to maintain aggressive military action for approximately two weeks, crude prices experienced a substantial increase. Brent crude futures rose to $106.16 per barrel on Thursday, a jump of roughly 5 percent from Wednesday’s price of $104.86. Despite efforts by numerous nations to mitigate the economic fallout through the strategic release of oil reserves, China has demonstrated a notable capacity to shield itself from the immediate crisis. This resilience stems from the country’s substantial reliance on Middle Eastern oil sources, particularly Iran, representing over half of China’s seaborne crude imports. Data from Kpler indicates that in 2025, China accounted for over 80 percent of Iran’s exported oil, with imports averaging 1.4 million barrels per day. Recognizing potential vulnerabilities, the Chinese government proactively prepared for an energy shortage in the years leading up to the current crisis. Following a strategic visit to an Iranian oilfield in 2021, President Xi Jinping declared the nation would independently manage its energy supply. This strategy has been implemented through the operation of "teapot refineries"—smaller, privately-owned facilities that leverage discounted oil resulting from international sanctions, building significant oil reserves and increasing imports from countries like Iran, Russia, and Venezuela. Prior to the January capture of Venezuelan President Nicolas Maduro, China was the largest purchaser of Venezuelan crude. Recent data reveals a slight decrease in China’s crude imports in March, falling to 10.19 million barrels per day compared to 11.51mbd in February. However, a significant portion of these shipments predates the conflict, and the substantial proportion of Middle Eastern crude – exceeding 50 percent of China’s total imports – suggests a considerable decline in April arrivals. Despite continued purchases of Russian and Iranian oil, this strategy will prove insufficient to fully offset the anticipated disruption to China’s energy supply.