Import exposure makes Gulf turmoil a direct economic risk
China is preparing for the economic fallout from the U.S. and Israeli war with Iran as energy flows from the Persian Gulf face severe disruption and shipping through the Strait of Hormuz is described as blocked. As the world’s largest energy importer, China is highly exposed to any sustained interruption in oil and gas deliveries, with the conflict unfolding just weeks before President Donald Trump’s planned state visit to China.
Analysis from Det Norske Veritas, an independent global assurance and risk management provider, indicates China imports about 70% of its oil and gas overall and that a majority of its energy supply originates in the Persian Gulf. That concentration turns the disruption into a macro risk, because higher energy costs can spread quickly through transport, manufacturing, and household consumption.
Henry Wang, president of the Centre for China and Globalization, told CBS News Tuesday that China’s supply lines will be seriously affected by what he described as a manmade crisis. He argued the blockage would not be confined to China, saying it would reverberate across Asia, Europe, Latin America, and the United States as global energy markets reprice scarcity.
Beijing condemns strikes while defending oil trade with Tehran
China’s top diplomat Wang Yi criticized the war on Sunday, accusing the United States of assassinating a sovereign leader, violating international laws, and pushing the region toward what he described as a dangerous abyss. The statement aligns with Beijing’s effort to portray the conflict as destabilizing for global markets and for international order.
China’s position is complicated by its long diplomatic relationship with Iran, which dates back more than five decades. After U.S. sanctions were reimposed on Tehran over its nuclear weapons program following the first Trump administration’s withdrawal from the Iran nuclear agreement in 2018, Iranian oil exports increasingly shifted toward China. Kpler data cited for 2025 indicates Iran has sold up to 80% of its oil to China under the sanctions regime.
Critics argue this trade has helped sustain Tehran’s government. Kpler figures cited in the account show China bought about 1.38 million barrels per day of Iranian oil last year. Henry Wang rejected the idea that the purchases represent political sponsorship, calling them normal trade and arguing it is unreasonable to expect global buyers to stop purchasing oil because another country opposes Iran.
Reserves and shadow logistics offer a buffer with limits
China is expanding renewables and nuclear power at a pace its government has described as leading global green growth, yet demand for petroleum continues to rise. Henry Wang said that despite gains in alternative energy, about 50% of China’s energy still depends on petroleum along with natural gas and other sources, leaving the economy vulnerable to supply shocks.
The conflict also threatens informal logistics supporting sanctioned crude flows. CBS News reported witnessing a shadow fleet off Malaysia in the Riau Archipelago conducting ship-to-ship transfers with Chinese tankers, a route that could stop abruptly if the war continues and risk conditions tighten.
Strategic stockpiles could soften the initial impact. Henry Wang said China has petroleum reserves that could cover roughly four to five months if the disruption persists. That cushion may buy time for rerouting and substitution, but it also sets a constraint if shipping conditions do not normalize and replacement barrels remain costly.
Trump Xi summit approaches as tensions add a new layer
The energy shock arrives amid a fragile U.S. China relationship. Trump is set to travel to China for a summit with President Xi Jinping at the end of the month. The two leaders last spoke by phone in February, when Taiwan and U.S. arms sales to the island were raised. Last year, Washington and Beijing moved through an escalating tariff conflict before reaching a fragile detente, leaving trade policy as a continuing fault line.
Some analysts believe the U.S.-led strikes on Iran form part of a White House approach aimed at constraining China by pressuring its energy supply lines. Henry Wang said the disruption will affect China’s imports but argued it would also harm the United States and its allies through higher energy costs and weaker growth, describing the strategy as self-harm in an interconnected global economy.
For Beijing, the policy challenge is to manage supply risk without allowing energy inflation to undermine domestic stability. For Washington, the conflict risks intensifying rivalry just ahead of a headline diplomatic meeting. The duration of disruption in and around Hormuz is likely to determine whether the episode becomes a short squeeze or a longer constraint for China and the wider global economy.