China’s longstanding energy partnership with Iran is facing serious strain as the widening conflict between Israel and Iran threatens to choke Beijing’s oil supply and erode its regional standing, according to a report in the Financial Times.
With Iranian oil targets in focus and heightening concerns of a possible blockade of the Strait of Hormuz a key energy artery for Chinese imports Beijing is increasingly unsure of its energy security. President Xi Jinping has urged restraint on all sides and decried the US interference in China’s trade with Iran. But Chinese officials are increasingly concerned with the interruption of the country’s vital Gulf oil imports.
China has been Iran’s top buyer of oil, at times importing as much as 1.6 million barrels a day. But shipments dropped to 740,000 barrels a day by April with increasing anxiety over sanctions and regional turmoil. A big blow in the Gulf would compel Chinese buyers to turn to more expensive options, even with contracts for years ahead with other producers such as Saudi Arabia, Qatar, and the UAE.
The crisis is accelerating President Xi’s push for energy independence. With renewables now making up 56% of China’s electricity capacity, analysts predict a faster shift toward solar, wind, and domestic energy sources. “If it wasn’t happening fast enough before, it will be happening even faster now,” said Bernstein Research’s Neil Beveridge.
At the same time, China’s tense relations with America dramatized by Trump administration trade policies are spurring Chinese companies to reroute investment towards Brazil, especially in agriculture, renewable energy, and strategic minerals.
China’s foreign credibility in the Middle East has also suffered. Previously lauded for facilitating the 2023 Saudi-Iran agreement, Beijing’s lukewarm reaction to the Israel-Iran conflict diluted its reputation as an objective intermediary, plunging its strategic alliances in the region into doubt.
