China, the world's largest importer of crude oil and liquefied natural gas (LNG), has begun activating measures to safeguard domestic fuel supply as rising geopolitical tensions in the Middle East and disruptions to shipments through the Strait of Hormuz heighten the risk of a potential supply shock.
The Strait of Hormuz, which connects the Persian Gulf to global markets, stands as the most critical link in China's energy supply chain. According to international data, of the roughly 15 million barrels per day (mb/d) of crude oil passing through the strait, about 5.4 million barrels are purchased directly by China.
This highlights how any physical disruption in the waterway could quickly translate into a direct energy supply security risk for the country.
According to international media reports, the Chinese government has instructed major state-owned refiners to temporarily suspend exports of diesel and gasoline. The move is seen as an effort to safeguard domestic fuel supply against the risk of potential disruptions in energy shipments.
Energy ties between Beijing and Tehran also play a significant role in this risk landscape. China, the largest buyer of Iranian crude, represents an indispensable market for Tehran.
While this trade supports China's efforts to diversify its energy portfolio, it also exposes the country to additional geopolitical risks.
Instability in the Middle East is threatening not only prices but also the security of key energy routes. Mounting pressure on the Strait of Hormuz is pushing Beijing to tighten short-term stock management while accelerating longer-term strategies to strengthen its energy supply security.
- Strategic reserves and buffers
According to the International Energy Agency (IEA) data, the Strait of Hormuz remains the most critical artery for China's energy security.
In early 2025, China imported approximately 5.4 mb/d of crude oil through the Strait, accounting for nearly 45-50% of its total oil imports.
The dependency is equally high for natural gas. Roughly 29% of China's LNG imports—primarily from Qatar and the UAE—transit the Strait. Qatar alone supplies about 27% of China's total LNG portfolio.
While Iran's offshore floating storage near Asian waters could provide a limited short-term buffer, China relies heavily on its national stockpiles.
An Oxford Institute for Energy Studies (OIES) report estimates China's total crude oil inventories at 1.1 to 1.3 billion barrels. This volume covers approximately 110 to 140 days of net imports, providing a critical cushion against potential supply shocks.
- LNG disruption 'harder to cushion' than oil
Michal Meidan, director of the China Energy Programme at the Oxford Institute for Energy Studies (OIES), warned that while much focus has been on the implications of the conflict for China's crude imports, the disruption in LNG flows is "significant and much harder to cushion or replace."
Highlighting the strategic importance of Gulf supplies, Meidan noted that Qatar remains a cornerstone of Beijing's energy security. "Qatar accounted for 27% of China's LNG imports and 14% of its total gas imports in 2025," she stated, adding that any prolonged halt in shipments through the Strait of Hormuz would leave China with few immediate alternatives.
Addressing China's options to mitigate a potential supply shortage, Meidan pointed to the country's "very limited" gas storage infrastructure.
According to CNPC estimates, China's underground storage stood at 27 billion cubic meters (bcm) at the end of 2024. Meidan emphasized that despite expectations for an increase in 2025, current levels remain "a far cry" from the 55-60 bcm target set in the 14th Five-Year Plan.
"This capacity represents only a fraction of China's total annual demand of 450 bcm," Meidan noted, highlighting that a prolonged disruption would quickly exhaust available reserves.
- 'Russian supplies cannot fully replace Gulf flows'
Meidan said alternative supplies such as Russian crude and pipeline gas could only partially mitigate potential shortages resulting from disruptions in the Gulf.
"They can help mitigate the shortage but they are no replacement. China is potentially losing around 5 mb/d of crude, Russia might be able to increase by as much as 0.5 mb/d, and the price of that crude will rise, especially if Indian refiners bid for it too," Meidan said.
She also noted that Russian gas supplies through the Power of Siberia 1 pipeline are already operating at full capacity, leaving only limited room for additional flows.
"If outages are prolonged, and navigation conditions improve, China will likely buy more LNG from the sanctioned Arctic LNG 2 project," she added.
Meidan said the reported suspension of refined fuel exports should be seen as a precautionary energy security measure.
"The reported decision not to export products is a precautionary energy security measure. The aim is to keep products at home in case the outages are protracted. While exports now would be commercially lucrative, the main goal is supply security," she said.
- Hormuz shipping risk looms over asia energy supply
Kaho Yu, head of Energy and Resources Research at risk intelligence firm Verisk Maplecroft, said China is not structurally dependent on Iranian oil volumes alone, as these can be substituted by other non-Gulf suppliers, although crude grade compatibility and logistics may complicate short-term adjustments.
"The greater vulnerability lies in potential shipping disruption through the Strait of Hormuz, which could affect a substantial share of China's broader crude and LNG imports, particularly from Saudi Arabia and Qatar, and intensify competition with other Asian and European buyers for alternative spot cargoes," he said.
Yu said tensions around the Strait of Hormuz are shifting from a maritime supply risk to a downstream stress point, as refiners and petrochemical producers across Asia begin adjusting exports and operating levels.
China's reported suspension of refined fuel exports signals a "pre-emptive effort to ringfence domestic availability," he said, warning that shipping instability could quickly translate into operational cuts and broader economic pressure across the region.
Yu noted that if tensions in the Middle East remain elevated, more Asian governments and energy companies are likely to adopt similar precautionary export and operational adjustments to stabilize domestic availability and moderate short-term price spikes.
He added that "these interventions remain temporary buffers and do not materially alter Asia's structural reliance on seaborne crude and LNG imports."
By Gokce Kucuk Topbas
Anadolu Agency
energy@aa.com.tr
