The War in Iran and China's Looming Energy Crisis

At the end of February, the United States (US) and Israel launched coordinated military strikes against Iran in an operation the US calls Operation Epic Fury and Israel refers to as Lion’s Roar.

As the war has escalated, the Strait of Hormuz, a narrow channel of water that connects the Persian Gulf to the Gulf of Oman and, ultimately, the Arabian Sea, has become significant. Its coastlines are dominated by Iran in the north while the Gulf states such as the United Arab Emirates, Bahrain, and Oman are on the southern side of the strait. At its narrowest point, the strait is only about 3km wide with Iran on the one side and Oman on the other, and the shipping lanes for oil tankers even narrower.

It is a strategic chokepoint because of how narrow the passage between the opposite coastlines is and because it is the only route that ships can use to transport the oil from the Gulf to international markets.

Approximately 20% of daily global oil production passes through that strait.

Roughly 80% of that oil is destined for Asian markets, including China.

In anticipation and as a consequence of the war, the global price of oil has lifted from around $60 to over $80 a barrel, or by more than 30%, as fears emerge that supply would be constrained.

China is one of the world’s largest importers of oil, and it has been heavily reliant on the Middle East, particularly Iran, for stable energy supplies. In 2025, China imported approximately 1.4 million barrels of oil per day from Iran, which accounted for 13.4% of its total seaborne crude imports. Chinese independent refiners were able to secure this crude at discounted prices, typically $8–$12 per barrel lower than the international price of Brent crude. This discount allowed China to keep its energy costs down.

China faces a dual threat. One is that the strait will be disrupted, the second is that it will not.

Should it be disrupted, one of China’s key supply lanes will be compromised. Should it not be disrupted, the reason can only be that the lane is under the control of its global rival, the US.