China spent decades building energy resilience through stockpiles, manufacturing dominance, and strategic partnerships.

For China, the Iran war and the effective closure of the Strait of Hormuz are not a shock like that facing Japan, South Korea, or India. Instead, it is a live test of a completely different model of energy security that is still forming: electrify where possible, leverage growing renewable capacity backstopped by coal, actively manage oil stockpiles and capacity amid growing demand elasticity, and finally diversify gas sources.

That model has not made China immune. The Strait of Hormuz still matters enormously, but the disruption has made visible something that was already structurally true: Beijing is better positioned than other Asian importers to absorb an energy shock, and it is better placed than any other large economy to profit commercially over the long term from the transition that such shocks accelerate. Both of those facts have strategic consequences extending well beyond fuel markets.

The baseline exposure is still very large. The International Energy Agency (IEA) estimates that roughly 84 percent of the crude and condensate moving through Hormuz in 2024 was bound for Asian markets, with an average of 20 million barrels per day transiting the strait in 2025. China was the single largest destination, taking approximately 5.4 million barrels a day through Hormuz in the first quarter before the war, more than 1 million barrels a day of which were produced by Chinese National Oil Companies (NOCs). Yet that volume did not translate directly into sudden vulnerability, because China had spent years building buffers to build its energy security capacity and handle nearly any disruption.

China’s Energy Security Model and Strategic Oil Reserves

In 2024, oil represented 20 percent of the total energy supply. By contrast, coal was 58 percent, and renewables (including hydro) were just under 10 percent, with natural gas making up 10 percent. A House Select Committee report described the oil strategy precisely: from discounted sanctioned crude sourced via Iran, Russia, and Venezuela, China assembled a strategic petroleum reserve of roughly 1.2 billion barrels by early 2026, equal to approximately 109 days of seaborne import cover, built at below market cost from the very barrels Western sanctions were designed to strand.

The Atlantic Council’s Energy Sanctions Dashboard notes that China added at least 169 million barrels of storage capacity across eleven new sites in 2025 and 2026, with around 83 percent of its 2025 import increase going directly into reserves rather than consumption. When Brent peaked at around $118 per barrel in March 2026, domestic Chinese oil prices moved at roughly one-fifth the volatility of the international market. This was in part due to rapidly reversing the flows of these strategic and commercial stockpiles and using them to reduce the shortfall in oil. The second part was reduced demand given the greater elasticity the Chinese economy appears to have shown, though how much is stockpiles and how much is demand is difficult to assess given the poor quality of data.

How China Uses Iranian and Russian Oil to Strengthen Energy Security

The three principal suppliers of discounted crude to China, Iran, Russia, and (previously) Venezuela, are not coincidentally the three most sanctioned energy exporters in the world. The relationship with each is both commercial and strategic, and the Strait of Hormuz crisis has brought the dual character of each into sharper focus.

China had been purchasing approximately 90 percent of Iran’s crude exports in recent years, according to the US-China Economic and Security Review Commission, and at discounted rates to the global market. That relationship collapsed after February 2026: bilateral trade fell roughly 50 percent year-over-year in Q1 2026, with the March figure showing an approximately 80 percent decline from the prior year. Chinese exports to Iran fell by around 90 percent over the same period, as shipping disruption and escalating US financial sanctions eliminated most of the commercial architecture. The disruption exceeds in severity the “maximum pressure” campaign of 2019–2020, which had driven Iran toward Chinese buyers as a workaround. This time, the war itself has physically impaired the supply route.

Washington has pushed even further than the logistical realities of the largely shuttered Strait of Hormuz. In April 2026, the Office of Foreign Assets Control (OFAC) added Hengli Petrochemical (Dalian) to its Specially Designated Nationals list, citing large-scale Iranian crude purchases linked to shadow fleet vessels. Beijing responded with a countervailing prohibition order—a legal assertion that Chinese courts have jurisdiction over commerce that OFAC does not. The exchange illustrates an entrenched structural logic: Iran depends on oil export revenue to fund its government and military, with its total oil and gas export earnings budgeted at around $33.5 billion for 2025 according to the government’s own budget documents. China, for its part, benefits not just from the discounted oil but from the geopolitical optionality of supplying a regime that Washington is trying to isolate.

Russia fills a different but complementary role. Chinese customs data show that in 2024, China received 108.47 million tons of Russian crude, 30 billion cubic meters of pipeline gas, and 8.3 million tons of liquified natural gas (LNG). As Gulf flows tightened in 2026, Russia’s oil exports to China rose around 31 percent year-on-year in Q1. Russian President Vladimir Putin visited Beijing in May 2026 to cement the relationship, but left without the Power of Siberia 2 deal he wanted: a 50-billion-cubic-meter-per-year pipeline through Mongolia that remains years from completion.

Moscow needs the Chinese market more than Beijing needs any single supplier. Russian crude has been discounted to Brent by more than $7 per barrel since the beginning of 2025, but this discount has become more volatile since the start of the conflict, reaching above $30 per barrel on some days. The relationship is profitable for Beijing precisely because Russia has nowhere else to go. At the conclusion of the conflict, this reality is likely to remain in place, leaving China with a continued strong position for access to plentiful discounted barrels.

Pakistan, Gwadar, and China’s Alternative Energy Security Corridor

Pakistan represents a third dimension of China’s energy-linked strategic footprint—and one that connects more directly to the Hormuz context than it might appear. From an energy security standpoint, Pakistan was hard hit by both the Ukraine crisis, when European countries bid away LNG cargoes, and now by the closure of the Strait of Hormuz, which is starving it of both needed oil and gas.

Under the China-Pakistan Economic Corridor, China invested approximately $68 billion in Pakistan between 2005 and 2024, with energy accounting for 74 percent of that portfolio. Of the 13 gigawatts (GW) of power capacity added, 8 GW came from coal-fired plants, raising coal’s share of Pakistan’s power mix from just over 3 percent in 2017 to over 19 percent by 2024. Pakistan’s grid is now materially dependent on Chinese-financed, Chinese-constructed, and largely Chinese-operated infrastructure. That dependency is part of the point: Gwadar, the deep-water port at the corridor’s southern terminus, sits at the mouth of the Arabian Sea and represents a potential maritime outlet for Chinese trade that would bypass both the Strait of Hormuz and the Strait of Malacca. Chronic circular debt and security risks in Pakistan’s Balochistan have slowed delivery on that ambition, but China anchoring a friendly state’s energy infrastructure at a strategically critical chokepoint has not changed.

China’s Clean Energy Manufacturing Dominance and Strategic Leverage

China has remained pragmatic regarding energy, keeping one foot in hydrocarbons, with its breakthroughs in gas fracking production levels as well as its ongoing use of coal, while investing for decades in the electrification of its own and the world’s economy. The fossil-fuel disruption from the effective closure of the Strait of Hormuz is big enough to prompt countries and companies to seek alternatives to Gulf supplies and alternatives to oil and gas. This will benefit those who hold the manufacturing chains—and who have the tools to use the transition as leverage.

In solar photovoltaics, China controls over 80 percent of the entire manufacturing stack from raw polysilicon to finished panels. Wood Mackenzie estimated that China would hold more than 80 percent of global polysilicon, wafer, cell, and module manufacturing capacity through 2026, following more than $130 billion in investments since 2023. One analysis puts China’s polysilicon market share in 2025 at 93.5 percent, with the industry running at well below 40 percent capacity utilization—not a sign of weakness but of deliberate below-cost pricing designed to price Western competitors out of the market.

The Information Technology and Innovation Foundation warned in September 2025 that this dynamic was already driving US and allied polysilicon producers toward bankruptcy, potentially leaving Western solar supply chains entirely reliant on Chinese inputs. Once that consolidation is complete, the overcapacity can be reduced and pricing power restored.

China’s own solar additions in 2026 are well down from the massive boom seen in 2025, with 93 GW added in May 2025 and just 10 GW added in April 2026. But it is the May number that is the outlier, as there was a June 2025 deadline when it transitioned from fixed-tariff support to market-oriented pricing. This caused projects to be pulled forward.

In electric vehicle (EV) batteries, the concentration is even more pronounced. SNE Research data for 2025 show CATL holding 39.2 percent of global EV battery installations, while BYD held 16.4 percent, giving Chinese manufacturers collectively approximately 69 percent of worldwide installations. Rhodium Group estimates that Chinese EV and battery firms invested $143 billion in overseas ventures between 2014 and 2025, and that in 2024 they spent more building supply chains abroad than at home for the first time. With Western markets raising tariff walls, Chinese firms have reoriented toward Asia, Africa, and Latin America. Countries seeking to electrify their transport sectors now face a structural choice: accept Chinese technology and the dependencies it brings or pay a significant premium for alternatives that often do not yet exist at scale.

Beijing has also demonstrated a willingness to use its upstream position in critical minerals as an active instrument of statecraft. In April 2025, China introduced export controls on seven heavy rare earth elements: neodymium, samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium, causing immediate shortages at European and American manufacturers of permanent magnets used in EV motors, wind turbines, and defense systems. European prices for these materials reached up to six times Chinese domestic prices within weeks.

A second, broader round of controls was announced in October 2025 and subsequently suspended as part of US-China trade negotiations, but the exercise demonstrated the point: China holds 60 percent of global rare earth mining and 90 percent of refining capacity, and it is prepared to weaponize that position. The Center for Security Studies at ETH Zurich concluded in April 2026 that China’s export control regime now provides it with diverse options for economic, security, and geopolitical agendas, and that the suspension of specific controls can be reversed depending on diplomatic conditions. The licensing regime will be a permanent feature that companies and countries should plan for, and it also gives significant power to China.

Why China Has an Energy Security Advantage Over Its Asian Rivals

None of this means China is strategically comfortable. The war has hurt it. The Diplomat noted in May that analysts see Brent potentially approaching $200 per barrel if the Strait of Hormuz remains effectively closed into 2027, and that even partial reopening is likely to embed a geopolitical risk premium into markets well beyond the immediate crisis. China’s macro situation is already deflationary; a sustained high energy import bill is a genuine constraint.

What the crisis has clarified is the margin between China and its regional peers—and how that margin was assembled. The stockpiles were built from sanctioned crude that Western governments tried to price out of markets. The infrastructure dependencies in Pakistan were created through a decade of below-market financing. The manufacturing positions in solar and batteries were secured through state-directed overinvestment that absorbed large losses while foreign competitors withdrew. The export controls on rare earths were introduced as negotiating leverage, suspended when a deal suited Beijing, and can be reimposed at will. Each of these moves was individually unremarkable. Taken together, they describe a strategy oriented not toward any single crisis but toward systematic reduction of the relative penalties China pays when crises occur.

That is the deeper significance of the Strait of Hormuz shock. East Asia Forum observed in May that the countries most damaged by the closure are the most likely to accelerate toward alternatives to oil and gas. It is clear that China is already positioning its clean energy technologies as the solution to the regional energy security problem exposed by the war. Countries such as Pakistan are moving toward Chinese solar systems. Others, warier of the implications of dependency, are less willing. But the choice itself reflects China’s position: it is not merely less vulnerable to this crisis than its competitors, it manufactures the instruments by which they might eventually reduce their own vulnerability. For Beijing’s rivals, such as Japan, South Korea, Taiwan, and India, the disruption in the Strait of Hormuz is an emergency requiring an immediate response. For Beijing, it is an accelerant of trends that were already running in its direction. That asymmetry is not accidental, and it is not going away.

About the Authors: Morgan Bazilian and Jamie Webster

Morgan D. Bazilian is the director of the Payne Institute and professor at the Colorado School of Mines, with over 20 years of experience in global energy policy and investment. A former World Bank lead energy specialist and senior diplomat at the UN, he has held roles at NREL, the Irish government, and advisory positions with the World Economic Forum and Oxford. A Fulbright fellow, he has published widely on energy security and international affairs.

Jamie Webster is an internationally recognized energy analyst with expertise on oil and gas markets, the geopolitics of energy and energy security. He is a Fellow at the Global Center for Energy Analysis, as well as the Payne Institute for Public Policy at the Colorado School of Mines.

The post How China Turned the Strait of Hormuz Crisis into an Advantage appeared first on The National Interest.

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