AS the world enters March 2026, global geopolitics appears to be undergoing a structural shift on energy flows.

The United States, having significantly expanded its control of Venezuelan crude exports and now asserting de facto influence over the Strait of Hormuz, is positioning itself to constrain one of China’s principal strategic advantages—access to discounted hydrocarbons. In doing so, US policymakers aim to leverage energy chokepoints and supply chains to influence the pace and direction of China’s industrial development. Since the early 2020s, Venezuelan heavy crude has been a critical component of global oil markets, attracting Chinese buyers due to its discounted price and compatibility with certain Chinese refineries. In 2025, China accounted for roughly 75 % of Venezuela’s oil exports, with an average near 642,000 barrels per day going eastward—representing a meaningful slice of China’s import portfolio. However, following US military and diplomatic intervention in Venezuela in early 2026, these flows have been sharply curtailed.

The US has implemented a near-blockade of Venezuelan cargoes destined for Asia, prompting a steep reduction in departures bound for Chinese ports. Only a small fraction of tankers have managed to break through this interdiction since mid-December 2025 and exports that once averaged well over 600,000 bpd to China are now projected to slump drastically. Additionally, the US Treasury has shifted the proceeds of Venezuelan sales into direct US Treasury accounts, repurposing revenues for internal reconstruction efforts—even as authorized US companies prepare to reintroduce Venezuelan crude into global markets under new licenses. This dual approach—restricting outbound flows to China while re-engaging Western oil majors—effectively puts Washington by the centre of Venezuelan energy monetization. Simultaneously, the Middle East has erupted into conflict following coordinated US and Israeli strikes on Iran, raising the spectre of real disruptions to oil exports through the Strait of Hormuz—the globe’s most important maritime chokepoint, responsible for about 20% of all crude and LNG shipments.

In the wake of these strikes, Iranian authorities and the Islamic Revolutionary Guard Corps have issued warnings that no vessel may transit Hormuz—a development that, if enforced, would be among the most consequential energy shocks in decades. Even without a fully enforced blockade, the mere possibility of closure has elevated oil risk premia, spiked freight and insurance costs and forced traders to reroute or delay shipments. The situation will further transform after the death of Iranian spiritual leader Ayatollah Khamenei and change in senior leadership. Because a large fraction of Iranian crude—historically amounting to 1.38 million barrels per day in 2025 and accounting for over 80% of its exports—flowed to China, any sustained disruption through Hormuz directly threatens Chinese energy security. In practical terms, Iran’s capacity to deliver cheap oil to Beijing has been curtailed both by heightened sanctions targeting its “shadow fleet” and by military and diplomatic pressure around these maritime routes.

China’s access to Venezuelan crude oil has been significantly curtailed, whereas the potential blockade over Hormuz comes at a delicate time. Chinese industrial expansion has long been underpinned by relatively low-cost energy imports from sanctioned producers, including Venezuela and Iran. Tehran’s exports helped Chinese refiners maintain margins and secure fuel sources less reliant on Middle Eastern majors. With these flows under pressure, Chinese buyers must increasingly compete on the open market, potentially at full market prices or via intermediaries whose inventories are already stretched. Moreover, the US sanctions targeting Iran’s shadow fleet and the logistics networks that sustained discounted oil routes have added costs, reduced transparency and raised compliance risk—factors that disproportionately affect Chinese traders and smaller independent refiners.

From a strategic perspective, these developments align with what might be described as a broader US grand strategy which reasserts control over critical energy resources and chokepoints, thereby shaping the geopolitical environment in ways that constrain rival powers’ leverage. By consolidating influence over Venezuelan crude and threatening to control flows through Hormuz, the US effectively holds key levers of the global hydrocarbon trade. Critically, this dynamic isn’t merely about supply quantities but about pricing power, routing and political leverage. If the US can calibrate its influence over these flows and gain a measure of control over the pace and even direction of industrial growth in China and beyond. In an era where access to affordable energy remains foundational to economic expansion, such leverage could translate into geopolitical advantage.

However, it needs to be understood that energy markets are interconnected and disruptions can trigger inflationary pressures, shifts in alliances and geopolitical blowback. In the short term, the world watches closely as these emerging fault lines in global energy shape not just markets but the future balance of power in the 21st century. Time will tell whether the US succeeds in controlling the pace of development of China by regulating the flow of hydrocarbon – the lifeline of the Chinese industry, infrastructure, data centres, transport, energy sector, etc. or otherwise. Pakistan for sure must brace for energy related crises until a foreseeable future.

—The writer, a Retd Brig, is expert in governance and management issues, teaches at CIPS, NUST, Islamabad.

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