Oil and gas prices have risen since the US and Israel attacked Iran last weekend, prompting an energy market that has been focusing on Middle East risk. US gasoline prices continue to rise, forcing the White House measure how to defuse political turmoil. Europe, just emerging from the shock of Russia’s invasion of Ukraine, faces another potential shock, with natural gas prices flat. higher standard since 2023.
China, like the world bigger fat and LNG importer, it may seem more obvious, and more likely to be hurt by this shock. Indeed, Beijing already to command refiners to block oil shipments to protect domestic products. But it would be wrong to assume, like many viewersthat China will be the main loser of the war. Conflicts often rearrange the geopolitics of energy in unexpected ways. This could ultimately strengthen, rather than weaken, China’s strategic position.
Oil and gas prices have risen since the US and Israel attacked Iran last weekend, prompting an energy market that has been focusing on Middle East risk. US gasoline prices continue to rise, forcing the White House measure how to defuse political turmoil. Europe, just emerging from the shock of Russia’s invasion of Ukraine, faces another potential shock, with natural gas prices flat. higher standard since 2023.
China, like the world bigger fat and LNG importer, it may seem more obvious, and more likely to be hurt by this shock. Indeed, Beijing already to command refiners to block oil shipments to protect domestic products. But it would be wrong to assume, like many viewersthat China will be the main loser of the war. Conflicts often rearrange the geopolitics of energy in unexpected ways. This could ultimately strengthen, rather than weaken, China’s strategic position.
Inside the first week of the war, the price of oil rose more than 25 percent and could increase by triple digits if the Strait of Hormuz—through which about a fifth of the world’s oil passes—continues to be largely blocked by tankers. US gasoline prices are now at their highest standard between President Donald Trump’s terms and they may go higher. And this increase has come even though most production facilities in the Persian Gulf have remained the same. Fortunately, both sides seem to be concerned that direct attacks on energy infrastructure will lead to retaliation against their critical assets.
Until now, disruption has been driven less by physical damage than by equipment and fear. Ships are running out of trouble, insurers are raising rates, and producers – especially in Iraq – have begun shutting down crops as stocks fill up without access to shipping lanes.
Natural gas markets have been hit hardest. After an Iranian drone struck Ras Laffan, Qatar’s facility that houses the world’s largest liquefied natural gas (LNG) terminal, Doha suspended its operations. Qatar offers approx 20 percent of LNG traded internationally, sending shockwaves through already tight markets.
China appears to be in a very difficult situation. Approx half of its crude imports and a third of its LNG imports go through the Strait of Hormuz. With so much at stake, China’s foreign ministry quickly to be called for the cessation of hostilities and for all sides to ensure that they pass through the stream safely. This is why some analysts have thrown away Beijing as the “biggest loser” of Trump’s strike against Iran.
Yet in the long run, there are at least three reasons why China could emerge as a surprising beneficiary.
First, for more than two decades Beijing has pursued an energy security strategy designed precisely for such a time. Its basis is electrification: to further shift the economy away from the direct use of oil and gas and thereby reduce exposure to a volatile oil and gas market subject to geographic disruption.
More than 30 percent of China’s final energy consumption now comes from exports electricitycompared to the latest 20 percent international. More than half of the cars to be sold in China it is electricity, the result of deliberate policies aimed at energy security such as reducing emissions. The International Energy Agency rates China to be avoided 1.2 million barrels per day of oil demand growth since 2019 and now China’s oil demand projects to increase 2027two years earlier than previously expected.
Beijing has also worked to generate as much of its electricity as possible from domestic sources. Coal and renewables to dominate combination of power, when almost all the needs of electricity growth in 2024 it encountered fresh sources, driven by the sun and wind. Half of the nuclear reactors being built worldwide are in China. Although the country imports natural gas, it is a volume the stock is used for electricity production. In the event of a prolonged LNG outage, China may rely more on domestic energy sources such as coal to fill the gap.
China would still feel the sting of the global oil shock, of course. But its drive to electrify—instead of doubling crude oil production—has limited its exposure. America can be the world bigger oil producer and major wholesale exporter, but because oil is traded internationally, American consumers feel the pain at the pump just the same. The most permanent hedge against a fat shock is to consume less fat, not just produce more.
China has also developed buffers. According to Kayrros, it is he holds about 1.4 billion barrels in strategic and commercial reserves, which provides China with 120 days of imports at the 2025 level. In contrast, the US Strategic Petroleum Reserve is about 40 percent small than it was ten years ago. Convinced that the shale revolution has provided energy independence, Congress has sold large amounts to fund unrelated spending. The Biden administration later released about 200 million barrels after Russia’s invasion of Ukraine to lower gasoline prices, although Russian exports ultimately appeared to be stable.
Second, the crisis could change how other countries measure energy security trade.
In a world where energy is increasingly used for weapons, many importers seek to mitigate the effects of volatile oil and gas markets by investing in electricity. Yet electrification poses a different possibility: China’s dependence on clean energy technology.
China’s electrification activity is accompanied by a concerted push to dominate clean energy supply chains. It occupies more than 80 percent of the world the sun industries, the wind turbines, and battery the ability to produce and process a large number of important minerals necessary for these technologies. Rapidly expanding the grid or deploying large amounts of solar, wind, and storage power is very difficult without increasing dependence on Chinese companies and materials.
That fact has dampened disappointment elsewhere. Europe, for example, aspires to become an electric country for climate and security reasons. Still like our colleagues Anne-Sophie Corbeau and Tatiana Mitrova have he explainedEuropean leaders are reluctant to trade reliance on imported hydrocarbons for reliance on Chinese cleantech supply chains.
This dispute may change that calculation somewhat. Dependence on China carries risks. But the reliability of traditional hydrocarbon exporters seems less certain than it was a few years ago. Europe’s decades-long trust in Russia as a reliable energy supplier has been shattered. LNG from the US has filled a big gap yet anxiety are growing calm in Europe about the reliability of US LNG exports. Europeans now fear that these could be absorbed into domestic politics—whether Washington wants to use them as a form of economic coercion or restrict exports in response to rising prices at home.
Now even the Persian Gulf, long a reliable anchor for global supply, appears more vulnerable. For decades Gulf producers were very reliable. Qatar never suspended LNG sales until this week. Saudi Arabia restored output at a surprising pace after 2019 attack at the Abqaiq station, showing the strength of its infrastructure. Even now, Saudi Aramco is to point the other way supply through the pipeline to the Red Sea to meet contractual obligations, underscoring the system’s remarkable resilience under stress.
For years, the closure of the Strait of Hormuz was a nightmare scenario that never materialized. Yet if the strait remains closed to tanker traffic, importing countries may begin to reassess the perceived risk. In that context, relying on China for power supply components and clean technology can be seen less as a strategic liability and more as a manageable business.
Third, more broadly, by starting this crisis without consulting its allies, Washington risks reinforcing the notion that the United States is the current main source of geopolitical instability. China, by contrast, is seeking to present itself as a stable trading partner. The result will be a growing tendency to move around among America’s traditional allies. Canada’s decision to cut restrictions to a limited number of Chinese EVs and European leaders visit for Beijing to strengthen clean energy cooperation reflect this.
China has a strong incentive to develop this emerging relationship. The clean energy industry—solar, batteries, and EVs—math for more than 11 percent of China’s GDP in 2025 and more than one third of its growth. If considered as an independent economy, this sector would rank among the world bigger. Maintaining that expansion requires foreign demand. As energy security concerns increase, China’s clean technologies may look more attractive.
Instant shock of this crisis reveals China’s dependence on Middle Eastern oil and gas. But it also underscores how Beijing has deliberately sought to prepare for a world in which energy security is inseparable from geopolitics—by electrifying its economy, securing domestic energy sources, accumulating reserves, and dominating clean technology supply chains.
The consequences may soon become clear. As Trump and Chinese President Xi Jinping prepare to meet, Washington is is reported considering urging Beijing to redirect oil purchases away from Russia and toward U.S. crude—an effort to use the traditional hydrocarbon standard at a time of market stress. Yet China has spent years trying to gradually reduce its structural exposure to such pressures, as well as the weakness that is now rocking the market.
If confidence in international oil and gas trade channels continues to wane as electricity supply increases, this crisis may be remembered as a pivotal moment in the transition to the electronic age. And in this new era, China comes to the negotiating table with a huge and growing advantage.
