The Blockade of Iran Forced China to Decrease Oil
Imports
As the war with Iran distracted the United States and Europe is focused on Russia, China exploited the situation to increase its belligerence against Japan and maritime claims around Taiwan and in the South China Sea. But the Iran war also included a blockade of Iran, which forced China to reduce its oil imports.
This demonstrates an underused strategy against the regime, and a war that cut both ways for Beijing. On May 31, China’s coast guard patrolled east of Taiwan in the context of efforts by Japan and the Philippines to peacefully
A few days ago, the regime floated its first small structure in Scarborough Shoal off the coast of the Philippines. If allowed, the People’s Liberation Army will likely use this “scientific” structure as a wedge to build one of its biggest and most important military bases in the South China Sea.
The Iran war and Beijing’s reaction indicate that a future conflict with China over its incrementalism continues to be a concern. U.S. strategy and bargaining with Beijing should remain cognizant of non-kinetic points of leverage that the United States retains over the Chinese Communist Party (CCP), including alliance coordination for higher tariffs, more economic sanctions, and options related to China’
In case of war or the Chinese regime’s continued incremental gains, the United States and our allies could, for example, gradually impose a naval blockade of China’s energy imports. According to analysts, China’s oil reserves may last only a few months, so the threat of a blockade would give Washington leverage.
But China’s dependence on imported oil is no geopolitical slam dunk. China has an estimated 851 million barrels of commercial reserves, 413 million barrels of strategic reserves, and the underground capacity for another 130 million barrels. As oil prices rose due to the Strait of Hormuz blockade, China demonstrated demand elasticity by tapering its oil imports by between 3 million and 4 million barrels per day (bpd). Prior to the blockade, Beijing reported importing about 11 million
Beijing could decrease its oil imports because it opened its commercial reserves starting in April and its strategic reserves in May. The regime restricted exports of refined oil products, including gasoline and diesel.