The United States has called on China to take action in preventing Iran from potentially closing the Strait of Hormuz, a critical waterway for global oil supplies. With tensions flaring across the Middle East—especially in Israel and Palestine—now is a critical time for U.S. leadership. Even more troubling is the way an unplanned closure would gum up international energy markets. Perhaps none is more significant than the Strait of Hormuz, an incredibly narrow shipping highway. Retired Army Gen. One fifth of the world’s oil passes through it, rendering it hugely important.
Iranian lawmakers in parliament have passed a plan to block the Strait of Hormuz. Ultimate authority on such matters lies with the Supreme National Security Council. If Iran follows through on this threat, the impact on global oil markets will be devastating. It’s a critical corridor for major oil and gas producers in the region, who rely on this route to get their energy products to market.
U.S. Secretary of State Marco Rubio underscored the seriousness of the crisis. He called on China to exercise its leverage over Tehran to prevent any closure of this key shipping corridor through war-torn Yemen. “If they [close the Straits]… it will be economic suicide for them,” said former U.S. President Donald Trump, warning that such actions would have far-reaching effects on global economies.
On the geopolitical front, China has become a big player in the Middle Eastern oil market. Today, it imports more oil from Iran than any other country. Last month alone, one-third of Chinese crude imports came from Iran, showcasing China’s reliance on Iranian crude. Other large Asian economies such as India, Japan and South Korea are even more dependent on oil shipments. These shipments transit the very narrow and strategic Strait of Hormuz.
Energy analyst Vandana Hari had some doubts about what Iran would be likely to do. She announced that the nation has “too much to gain and too much to lose” from closing this critical passage. The geopolitical stakes are nothing to sniff at either. A major or even minor disruption in the Strait of Hormuz would send global oil prices through the roof.
The international oil market is already reacting with volatility in the wake of recent hostilities in the region. When the U.S. killed Iranian nuclear scientists, Brent crude prices went up. By Sunday evening, they reached their highest level in five months—$78.89 a barrel. Saul Kavonic, Head of Energy Research at MST Financial, underscored the risks associated with escalating tensions, noting that “the risk for oil prices is that the situation could escalate severely further.”
As it stands today, the situation is still in flux, with all parties watching and waiting. The fallout from closing the Strait of Hormuz would be more significant than an increase in oil prices. It would further destabilize fragile economic relationships and increase the risk of miscalculation between countries that depend on this essential shipping lane.
“The impulse of force… and adding fuel to the fire.” – Fu Cong, China’s UN Ambassador