An oil refinery on the banks of the River Huangpu in Shanghai, China, October 2018. China’s energy security strategy combines oil reserves, manufacturing capacity, and strategic partnerships to reduce vulnerability to external shocks. (Shutterstock/Steve Heap)

How China Turned the Strait of Hormuz Crisis into an Advantage

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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........

© The National Interest