By: Tim Daiss
China is in a tightening bind. A fragile two-week ceasefire has kept the Strait of Hormuz partially open, but flows remain constrained and increasingly shaped by political tolerance rather than market forces. For Beijing, which continues to rely on Iranian oil, this exposes a strategic vulnerability it can no longer ignore: its energy security rests on sea lanes it doesn’t control, a dilemma exacerbated by US President Donald Trump’s precipitate complete shutdown of the Hormuz Strait.
The global oil market is a creature of high volatility and supply anxiety with traders weighing geopolitical risk against potential peace talks. In fact, the Strait is no longer functioning as a purely commercial artery. It has become a politically managed corridor, where access depends as much on geopolitical alignment as on market demand and it is a mystery when that will change. That distinction matters.
China has long relied on Middle Eastern crude, including sanctioned Iranian oil, to fuel its economy. While official data often obscures the scale of those imports, few doubt that Chinese refiners continue to take in discounted Iranian barrels, often routed through opaque trading networks. This arrangement has suited both sides. Tehran secures a steady buyer, while Beijing secures a discounted supply. The transaction, however, depends on one critical assumption: that oil can move freely enough through Hormuz to reach Asian markets.
That assumption is now under pressure. Even partial disruption of the Strait alters the equation. Shipping delays, higher insurance costs, and the growing risk of interdiction all raise the effective price of oil, regardless of official benchmarks. More importantly, they introduce uncertainty into supply chains that depend on predictability. For China, which prizes stability in energy procurement, that uncertainty is itself a form of risk.
The current ceasefire between the US and Iran does little to resolve that. If anything, it underscores the fragility of the situation. A two-week window of relative calm is not a structural solution. It’s a pause, and pauses, in geopolitics, tend to be temporary.
Beijing’s limitations
What makes this particularly uncomfortable for Beijing is its limited ability to shape events on the ground. Unlike the US, which maintains a significant naval presence in the Gulf and has long positioned itself as the guarantor of maritime security, China lacks both the infrastructure and the alliances to exert comparable influence. Sure, its navy has expanded rapidly in recent years, but projecting sustained power into the Gulf remains a complex undertaking. In other words, it’s still not yet a blue-ocean navy, no matter how hard Beijing tries to claim otherwise. This, in effect, creates a troubling mismatch between dependence and control.
Notably, China depends on energy flows that pass through one of the world’s most contested chokepoints, yet it has minimal direct control over the security of that route. During stable times, that gap is manageable. However, during periods of tension, it becomes more pronounced. There’s also a broader strategic dimension to consider. China’s energy security strategy has traditionally focused on diversification, sourcing crude from multiple regions, investing in upstream assets abroad, and building strategic petroleum reserves at home. Good moves. These measures have indeed improved resilience, but they don’t eliminate exposure to chokepoints like the Strait of Hormuz. As long as a significant share of imports flows through the Strait, vulnerability remains.
That raises uncomfortable questions: can China continue to rely on others to secure a route so central to its economic stability? And perhaps more poignantly, should it?
For decades, Beijing has been content to benefit from a system largely underwritten by the US. The US Navy has patrolled key sea lanes, deterred disruptions, and responded to crises when they arise, benefiting the rest of the world at no cost. China, meanwhile, has focused on economic expansion, avoiding deep entanglement in Middle Eastern security affairs. Finally, that division of labor is now being tested.
External security guarantees
The current situation suggests that relying on external security guarantees may no longer be sufficient. As geopolitical competition intensifies and regional conflicts become more frequent, the risks to critical supply routes increase. In such an environment, passive reliance carries its own costs. Stepping in, however, is anything but straightforward. Any visible Chinese role in securing Hormuz would carry political implications: it could draw Beijing deeper into Middle Eastern rivalries, complicate its relations with Iran, and potentially put it at odds with US interests in the region. It would also require a level of military and diplomatic coordination that Beijing has historically been cautious to undertake. Even more problematic for Xi Jinping, it would involve actual coordination efforts with Washington. Currently, neither side is ready for that contingency.
Yet doing nothing is also a choice, with concrete consequences. If Hormuz remains only partially open, governed by shifting political calculations, China may find itself repeatedly exposed to price spikes, supply disruptions, and strategic uncertainty. Over time, that could erode one of the key pillars of its economic model: reliable access to affordable energy. There are, of course, other options. China could accelerate efforts to secure alternative supply routes, including overland pipelines from Russia and Central Asia. It could expand its strategic petroleum reserves further, providing a buffer against short-term disruptions. It could also increase investments in renewable energy and domestic production to reduce overall import dependence. The last option, however, is expensive, while also harming the country’s already fragile decarbonization efforts.
All of these steps, however, are already underway to varying degrees, but they take time. Moreover, none of them fully replaces the scale and flexibility of seaborne oil imports from the Middle East. In the near term, Hormuz remains indispensable.
That reality leaves Beijing in an awkward position. It must navigate a situation where its energy lifeline is exposed to forces beyond its control, while avoiding actions that could entangle it in conflicts it would prefer to sidestep.
The two-week ceasefire offers a temporary reprieve, but it doesn’t resolve the underlying tension. If anything, it highlights the extent to which global energy flows can be influenced by political decisions rather than market dynamics. For China, the lesson is clear. Energy security isn’t only about securing supply, it’s also about securing the routes through which that supply travels. The question now is whether Beijing is prepared to act on that lesson, or whether it will continue to rely on a system that’s becoming increasingly uncertain.
Tim Daiss is an energy markets analyst in the Asia-Pacific region and a partner at APAC Energy Consultancy. He is a regular Asia Sentinel contributor.
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