Physical Address
304 North Cardinal St.
Dorchester Center, MA 02124
Oil and gas prices have skyrocketed since the U.S. And Israel attacked Iran last weekend. It created a stir in energy markets that were becoming complacent about risks in the Middle East. US gasoline prices have skyrocketed, prompting the White House to take action. weigh Ways to end political fallout Europe, which has just emerged from the shock of Russia’s invasion of Ukraine. Facing potential pressures again The price of natural gas is at the level maximum level Since 2023
China as a world biggest oil and LNG Importers appear to be the most exposed and most likely to be hurt by this shock. In fact, Beijing already has one. order Refineries to reduce fuel exports to protect domestic supply But I’d probably think wrongly. As many observers havethat China will lose the big war Crises often reorder energy geopolitics in unexpected ways. This may strengthen China’s strategic position. Instead, it weakens China’s strategic position.
Oil and gas prices have skyrocketed since the U.S. And Israel attacked Iran last weekend. It created a stir in energy markets that were becoming complacent about risks in the Middle East. US gasoline prices have skyrocketed, prompting the White House to take action. weigh Ways to end political fallout Europe, which has just emerged from the shock of Russia’s invasion of Ukraine. Facing potential pressures again The price of natural gas is at the level maximum level Since 2023
China as a world biggest oil and LNG Importers appear to be the most exposed and most likely to be hurt by this shock. In fact, Beijing already has one. order Refineries to reduce fuel exports to protect domestic supply But I’d probably think wrongly. As many observers havethat China will lose the big war Crises often reorder energy geopolitics in unexpected ways. This may strengthen China’s strategic position. Instead, it weakens China’s strategic position.
within the first time Week of war, oil prices rose more than 25 percent And it could surge into the triple digits if the Strait of Hormuz hits. It is a strait through which approximately one-fifth of the world’s oil passes. It remains largely closed to tanker traffic. US gasoline prices It’s at its highest level. level on the terms of any President Donald Trump, and is likely to climb further. And this surge has occurred even though most of the main production facilities in the Persian Gulf remain intact. Fortunately, both sides are concerned that direct attacks on energy infrastructure will trigger retaliation against their own critical assets.
Until now, disruption has been driven less by physical damage than logistics and fear. Oil tankers are avoiding the strait. Insurance companies are raising rates and manufacturers, especially in Iraq. It has begun shutting down production as storage space is full with no access to export routes.
The natural gas market continues to be hit harder. after an Iranian drone attacked Ras Laffan, a complex in Qatar that houses the world’s largest liquefied natural gas (LNG) export facility. Doha also suspended operations. Qatar supplies approx. 20 percent of LNG traded around the world It sent shockwaves through an already congested market.
China appears to be at high risk. half Of crude oil imports and one-third of LNG imports pass through the Strait of Hormuz. With so much at stake, China’s Ministry of Foreign Affairs rushed called To end hostilities and to allow all sides to safely pass through the strait. This is why some analysts have handsome Beijing is probably ‘Big loser’ from Trump’s attack on Iran
In the long term, there are at least three reasons why China might emerge as a surprise beneficiary.
First, for more than two decades, Beijing has pursued an energy security strategy designed specifically for times like these. At its heart it is electrification: shifting the economy further away from direct oil and gas consumption. and thereby reduce exposure to volatile oil and gas markets that are prone to geopolitical disruptions.
Currently, more than 30 percent of China’s final energy consumption comes from electricitycompared to just over 20 percent Worldwide, more than half of cars sold In China, electricity is used This is as much the result of a deliberate policy aimed at energy security as it is a result of a deliberate policy aimed at energy security. with reducing greenhouse gas emissions The International Energy Agency estimates that China has avoid Oil demand has grown by 1.2 million barrels per day since 2019, and it is now expected that China’s oil demand will peak in 2019. 2027Two years earlier than expected
Beijing has also been working to produce as much electricity as possible from domestic sources. Coal and renewable energy occupy energy mix, while almost all electricity demand growth In 2024, find clean water sources. led by the sun and wind Half of the nuclear reactors under construction worldwide are in China. Even though the country only imports natural gas, modest The share will be used to produce electricity. In the event of a prolonged LNG disruption, China could rely on domestic energy sources such as coal to further bridge the gap.
Of course, China will continue to feel the pain of the global oil crisis. But the push to become an electrified state Instead of doubling crude oil production The risk has been reduced. The United States may be the world. biggest Major oil producer and net exporter But because oil has a global price. American consumers are feeling the same pain at the pump. The most durable protection against oil shocks is using less oil. It’s not just more production.
China has also created a buffer zone. According to Kayrros, it hold Approximately 1.4 billion barrels in strategic and commercial storage. This gives China 120 days of import coverage at 2025 levels. U.S. Strategic Petroleum Reserves It’s around 40 percent. smaller than ten years ago With the belief that the Stone Revolution had created energy independence Congress then sold off large quantities to support unrelated spending. The Biden administration later released about 200 million barrels of oil after Russia’s invasion of Ukraine to control oil prices. Russian exports will ultimately prove resilient, though.
Second, the crisis could change the way other countries Weighing the energy security trade-offs
In a world where energy is increasingly becoming a weapon Many importers are trying to reduce their exposure to the volatile oil and gas market by using electricity. But electrification presents a different set of vulnerabilities. That is our reliance on China for clean energy technology.
China’s electric mobility has been paired with a concerted push to dominate the clean energy supply chain. Accounting for more than 80 percent of the world. solar energy production, wind turbine and battery Most of the critical mineral processing and production capacity required for these technologies Expanding the grid quickly or deploying large-scale solar, wind, and storage is extremely difficult without deep reliance on Chinese companies and materials.
That reality has tempered ambitions elsewhere: Europe, for example, aspires to become a hydrothermal state for both climate and security reasons. As our colleagues Anne-Sophie Corbeau and Tatiana Mitrova have explainEuropean leaders are reluctant to trade reliance on imported hydrocarbons for reliance on China’s clean technology supply chain.
This conflict may change some of those calculations. Reliance on China is risky But the reliability of traditional hydrocarbon suppliers is less certain than it was just a few years ago. Europe’s decades-long trust in Russia as a reliable energy supplier has been eroded. LNG from the United States has largely filled the gap. Concerns is growing quietly In Europe over the reliability of U.S. LNG exports, Europeans now fear they could become entangled in domestic politics. Regardless, Washington will try to use them as a form of economic coercion. or restrict exports in response to rising domestic prices.
Even the Persian Gulf, which has long been a reliable global supply mainstay, Still looking more frail For decades, Gulf manufacturers have been exceptionally reliable. Qatar had never suspended LNG exports until this week. Saudi Arabia quickly recovers output after 2019 attack on the Abqaiq factory, demonstrating the robustness of the infrastructure Even now Saudi Aramco is like that. redirection Pipeline delivery to the Red Sea to meet contractual obligations This underscores the system’s outstanding resilience under stress.
Many years ago Closing the Strait of Hormuz is a nightmare scenario that never materializes. But if the strait remains largely closed to tanker transport, Importing countries may begin to reassess risks that have long been considered theoretical. In such a context Relying on China for electrical system components and clean technology may seem less strategically irresponsible. But it is more like a manageable exchange.
Third, more broadly, Instigating this crisis without consulting allies Washington risks reinforcing the perception that the United States It is the largest source of geopolitical volatility today. On the contrary China is trying to present itself as a more stable trading partner. The result is an increased tendency to hedge among traditional U.S. allies, easing Canadian decision-making. Limitations on a limited number of Chinese and European leaders’ EV vehicles Visits to Beijing to deepen clean energy cooperation reflect this.
China has powerful incentives to cultivate these emerging relationships. The clean energy industry—solar power, batteries, and EVs—account More than 11 percent of China’s GDP in 2025 and more than a third of its growth. If treated as a standalone economy This sector will be ranked number one in the world. biggestTo sustain such expansion, there must be demand from abroad. As concerns about energy security intensify China’s clean technology may therefore become more attractive.
Immediately a state of shock occurred. of this crisis has made China dependent on oil and gas in the Middle East. But it also underscores Beijing’s deliberate effort to prepare for a world in which energy security is inseparable from geopolitics. By creating an economic system that uses electricity. Provide energy sources within the country Accumulate energy storage and dominate the clean technology supply chain.
The effects may soon become apparent. As Trump and President Xi Jinping prepared to meet, so did Washington. It is reported that Consider calling on Beijing to redirect oil purchases away from Russia and toward U.S. crude. It is an attempt to capitalize on traditional hydrocarbons at a time of tight markets. However, China has spent years trying to gradually Reduce the structural impact of such pressures. Just like the fragility that is currently rocking the market.
If confidence in global oil and gas trade routes continues to erode as electrification accelerates, The crisis may be remembered as a key moment in the transition to the era of the electroshock state. And in this new era China comes to the negotiating table with a serious and increasing advantage.
