Iran blocks Strait of Hormuz: What it means for global oil and China’s energy security

The Israel-US attack on Iran has triggered fresh uncertainty in global energy markets. Iran’s Revolutionary Guards warned on Saturday that no vessel would be allowed to pass through the Strait of Hormuz, a chokepoint through which nearly a fifth of the world’s oil supply passes.

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An official from the European Union’s naval mission Aspides said vessels in the region had received VHF transmissions from Iran’s Revolutionary Guards stating that “no ship is allowed to pass the Strait of Hormuz”, Reuters reported on Sunday. 

The Strait of Hormuz connects the Gulf’s largest oil producers – including Saudi Arabia, Iran, Iraq and the United Arab Emirates – to the Gulf of Oman and the Arabian Sea. Around 20 million barrels per day of crude and refined products move through the narrow shipping lane between Iran and Oman, accounting for almost one-fifth of global oil consumption.

A disruption there would ripple across Asia’s largest economies. It would also halt Iran’s own exports, depriving Tehran of critical revenues – one reason the waterway has never been fully blocked despite repeated threats.

However, Reuters reported that many countries, particularly those heavily dependent on oil imports, could tap strategic reserves in the event of a supply shock. The International Energy Agency (IEA) requires its members to hold at least 90 days of net imports of crude oil and refined products in strategic reserves.

China’s exposure to Iranian crude

For China, the world’s largest crude importer and the biggest buyer of Iranian oil, any disruption in Hormuz would immediately test its energy security strategy. 

China buys more than 80 per cent of Iran’s shipped oil, according to 2025 data from analytics firm Kpler. Iranian crude has limited buyers because of US sanctions aimed at curbing funding for Tehran’s nuclear programme.

Kpler data show China purchased an average of 1.38 million barrels per day of Iranian oil last year, representing about 13.4 per cent of the 10.27 million barrels per day it imported by sea.

Chinese independent refiners – known as “teapots” and clustered mainly in Shandong province – are the primary buyers of Iranian crude. Drawn by steep discounts compared with non-sanctioned barrels, these refiners account for roughly a quarter of China’s refining capacity. They operate on narrow, and sometimes negative, margins and have recently faced pressure from weak domestic demand for refined products.

China’s large state-owned oil companies, however, have refrained from buying Iranian crude since 2018–2019.

Yet weeks before the current escalation, China had already begun shifting its import mix. According to a February 26 report by Iran International, Beijing appeared to be replacing disrupted Venezuelan shipments with Russian crude rather than increasing purchases from Iran – even though Tehran was offering deeper discounts.

Kpler data shared with the outlet showed China discharged an average of 1.138 million barrels per day of Iranian crude at its ports this month – about 115,000 barrels per day less than in January.

Separate figures from Vortexa indicated China’s average purchases of Iranian oil in February were just over 1.03 million barrels per day, marking a decline of 220,000 barrels per day compared with January.

The shift began after a maritime blockade targeting Venezuelan tankers and the detention of Venezuelan President Nicolás Maduro by US commandos on January 3, which interrupted deliveries to China and led several Chinese refiners to halt purchases.

Vortexa data showed Russian crude rapidly filling the gap. China received an average of 2.07 million barrels per day of Russian oil this month, 370,000 barrels per day more than in January. That increase closely matched Venezuela’s average crude exports to China in 2025, suggesting a near one-for-one replacement.

The decline in Iranian crude discharges occurred despite Tehran offering discounts of $10–11 per barrel on its light crude in February, roughly 16 per cent of the benchmark value and comparable to those offered by Russia.