How Iran crisis rewrites energy geopolitics in China’s favour

Oil and gas prices have surged since the United States and Israel launched strikes on Iran on February 28, jolting energy markets that had grown increasingly complacent about geopolitical risks in the Middle East. In the United States, petroleum prices have climbed sharply, while Europe—still recovering from the energy shock triggered by the Ukraine war—now faces the prospect of another squeeze, with natural gas prices hitting their highest levels since 2023.

Yet China appears especially vulnerable, at first glance. As the world’s largest importer of oil and liquefied natural gas (LNG), it relies heavily on energy flows that pass through the Strait of Hormuz. Beijing has already instructed refiners to curb fuel exports in order to safeguard domestic supplies.

However, as an analysis in Foreign Policy argues, it would be misguided to assume that China will emerge as the conflict’s primary loser. Energy crises often reshape geopolitical dynamics in unexpected ways—and this one may ultimately strengthen China’s strategic position rather than weaken it.

Natural gas markets have been particularly hard hit. Following an Iranian drone strike on Ras Laffan—the Qatari hub that hosts the world’s largest LNG export facility—Doha suspended operations, sending shockwaves through already tight global supply. Qatar accounts for roughly 20 percent of globally traded LNG, amplifying the disruption.

Given that about half of China’s crude imports and a third of its LNG supplies pass through the Strait of Hormuz, the risks are significant. China’s foreign ministry quickly called for de-escalation and the protection of shipping routes, reinforcing the perception among some analysts that Beijing stands to lose most from the crisis.

However, the article identified three structural factors that suggest a different outcome awaiting Beijing  over the longer term.

Electrification as strategic buffer

First, China has spent decades building an energy strategy designed for precisely this kind of disruption. Central to that approach is electrification—reducing reliance on direct oil and gas consumption by shifting more of the economy toward electricity.

Today, more than 30 percent of China’s final energy use comes from electricity, compared with just over 20 percent globally. Over half of all cars sold in China are electric, reflecting policies aimed not only at cutting emissions but also at strengthening energy security. According to the International Energy Agency, these efforts have already avoided 1.2 million barrels per day in oil demand growth since 2019, with Chinese oil demand now expected to peak as early as 2027.

China has also prioritized domestic energy production. Coal and renewables dominate its power mix, and nearly all electricity demand growth in 2024 was met by clean sources such as solar and wind.

While China does import natural gas, only a relatively small portion is used for power generation. In the event of prolonged LNG disruptions, it can fall back more heavily on domestic resources—particularly coal—to maintain supply.

In short, while China would still feel the impact of a global oil shock, its evolution toward what some describe as an “electrostate” has significantly reduced its exposure.

Shift in global energy dependencies

Second, the article identifies that the crisis may alter how other countries evaluate energy security. As oil and gas markets become more volatile and increasingly weaponized, many import-dependent economies are accelerating electrification.

But this shift introduces a new dependency—on China.

Beijing has paired its electrification strategy with an aggressive push to dominate clean energy supply chains. It controls more than 80 percent of global solar manufacturing, wind turbine production, and battery capacity, and processes the majority of critical minerals needed for these technologies.

For countries seeking to expand renewable energy and electrify their economies, reducing reliance on fossil fuels often means increasing reliance on Chinese technology and materials.

Europe illustrates this dilemma. While it aims to become more electrified for both climate and security reasons, leaders remain cautious about swapping dependence on imported hydrocarbons for reliance on Chinese clean-tech supply chains.

The Iran conflict may begin to shift that calculation, the article forecasts. While dependence on China carries risks, the reliability of traditional energy suppliers now appears less certain than it did just a few years ago.

Geopolitics and perception

Third, the crisis may reshape geopolitical perceptions. By acting without close coordination with allies, Washington risks reinforcing the view that it is a source of global instability.

China, by contrast, is positioning itself as a more predictable economic partner. This dynamic could encourage even traditional US allies to hedge their bets. Moves such as Canada easing restrictions on certain Chinese electric vehicles and European leaders engaging Beijing on clean energy cooperation reflect this emerging trend.

China has strong incentives to deepen these relationships. Clean energy industries—including solar, batteries, and electric vehicles—accounted for more than 11 percent of its GDP in 2025 and over a third of its economic growth.

If treated as a standalone sector, China’s clean energy economy would rank among the largest in the world. Sustaining that growth requires continued global demand, something that the Foreign Policy journal suggests may increase as energy security concerns intensify.

By Nazrin Sadigova