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China entered the most severe Middle East energy shock in years better insulated than almost any other major economy, armed with an estimated 1.2 to 1.4 billion barrels of stockpiled crude and a domestic fuel pricing regime that shields consumers from global market swings. But the simultaneous loss of Iranian and Venezuelan supply has complicated what analysts had assessed as a position of strategic strength.
The United States and Israel launched coordinated air strikes on Iran on February 28, triggering an immediate spike in energy markets. Brent crude futures jumped roughly 8 percent to approximately $79 a barrel within two days of the strikes, while U.S. crude futures rose as much as 11 percent. European natural gas prices surged by around 25 percent, adding fresh pressure to a continent already managing elevated energy costs.
Hormuz Closure Claims Rattle Markets
Iran claimed on Monday that the Strait of Hormuz had been closed, with a senior Islamic Revolutionary Guard Corps adviser quoted as saying Iran would attack any vessel attempting to cross. U.S. Central Command denied the Strait was shut. Analysts noted the claim carried inherent contradictions: approximately 80 percent of Iran’s own oil exports must pass through the waterway to reach China, making a sustained, self-imposed closure strategically costly for Tehran.
The Strait handles roughly one fifth of global oil shipments and serves as a critical corridor for cargo bound for Gulf countries, now China’s second-largest steel export market. A one-month closure would create a supply gap that non-OPEC producers, including the United States, lack spare capacity to offset quickly.
China’s Stockpile Offers Near-Term Cover
Data from analytics firm Kpler placed China’s refined crude stockpile at between 1.2 and 1.4 billion barrels at end of 2025, equivalent to roughly three months of imports. Analysts at LSEG Oil Research estimated China’s crude imports at 12.47 million barrels per day for the first two months of 2026, as refiners continued purchasing discounted Russian and Iranian barrels. With domestic output holding near 4.2 million bpd and refinery throughput at approximately 14.7 million bpd, the estimated surplus for January and February may have reached nearly 2 million bpd.
That buffer gives Chinese refiners two operational levers. They can reduce imports in the coming months to partially offset the price surge, with some analysts projecting import volumes could fall to between 10.5 and 11.0 million bpd by May and June. Alternatively, refiners can maintain throughput to secure domestic supply and position for increased fuel exports to Asian markets if crude flows from the Middle East tighten further.
Because Beijing controls domestic retail fuel prices, Chinese consumers and businesses are shielded from the energy-led inflation now hitting competitors in the United States and Europe.
Venezuela Loss Compounds the Supply Squeeze
The current conflict is the second in three months to disrupt a key discounted supply source for China. A U.S. military operation earlier this year toppled Venezuela’s government, eliminating a source that had accounted for roughly 4 percent of China’s oil needs. Iran had previously supplied an average of 1.38 million barrels per day, or about 13 percent of China’s seaborne crude purchases, according to Kpler. Around 42 million barrels of Iranian crude were held in floating storage in Asian waters earlier this year.
Combined, the two disruptions have effectively cut off close to one fifth of China’s oil supply. Analysts noted that even before the current escalation, China had begun shifting its import mix toward Russian crude rather than increasing Iranian purchases, even as Tehran offered deeper discounts.
Strategic Vulnerability Behind the Stockpile
Analysts told Newsweek that the targeting of China’s discounted supply sources appeared to form part of a broader strategic calculation by Washington. China’s military, dependent on gasoline and diesel, cannot operate on coal or renewables, making sustained oil access a national security variable rather than purely a commercial one.
Beijing has anticipated this class of risk for more than a decade. China’s accelerated buildout of renewable energy capacity and one of the world’s largest electric vehicle fleets are now reducing domestic oil demand by more than 1 million bpd, a figure analysts expect to grow by a further 600,000 bpd over the next year.
Chinese Foreign Minister Wang Yi urged Gulf countries this week to oppose external interference and keep their futures in their own hands. The Foreign Ministry called on all parties to immediately halt military operations and avoid further escalation, describing the Strait of Hormuz and its adjacent waters as a critical international trade route for goods and energy.
