Oil and gas prices have jumped since the United States and Israel struck Iran last weekend, jolting energy markets that had grown complacent about Middle East risk. U.S. gasoline prices are surging, forcing the White House to weigh how to blunt the political fallout. Europe, just emerging from the shock of Russia’s invasion of Ukraine, faces another potential squeeze, with natural gas prices at their highest level since 2023.

China, as the world’s largest oil and LNG importer, would seem the most exposed, and the most likely to be hurt by this shock. Indeed, Beijing has already ordered refiners to curb fuel exports to protect domestic supplies. But it would be a mistake to assume, as many observers have, that China will be the war’s big loser. Crises often reorder energy geopolitics in unexpected ways. This one may ultimately strengthen, rather than weaken, China’s strategic position.

Oil and gas prices have jumped since the United States and Israel struck Iran last weekend, jolting energy markets that had grown complacent about Middle East risk. U.S. gasoline prices are surging, forcing the White House to weigh how to blunt the political fallout. Europe, just emerging from the shock of Russia’s invasion of Ukraine, faces another potential squeeze, with natural gas prices at their highest level since 2023.

China, as the world’s largest oil and LNG importer, would seem the most exposed, and the most likely to be hurt by this shock. Indeed, Beijing has already ordered refiners to curb fuel exports to protect domestic supplies. But it would be a mistake to assume, as many observers have, that China will be the war’s big loser. Crises often reorder energy geopolitics in unexpected ways. This one may ultimately strengthen, rather than weaken, China’s strategic position.

Within the first week of war, oil prices rose more than 25 percent and could surge into triple digits if the Strait of Hormuz—through which roughly one-fifth of the world’s oil passes—remains largely closed to tanker traffic. U.S. gasoline prices are now at their highest level of either of President Donald Trump’s terms and are likely to climb further. And this spike has come even though most major production facilities in the Persian Gulf remain intact. Thankfully, both sides appear worried that direct attacks on energy infrastructure would invite retaliation against their own vital assets.

So far, the disruption has been driven less by physical damage than by logistics and fear. Tankers are avoiding the strait, insurers are raising rates, and producers—particularly Iraq—have begun shutting in output as storage fills without access to export routes.

Natural gas........

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