In less than two months, US President Donald Trump has removed two of Beijing’s closest allies, threatening China’s oil supplies in the process.
Venezuelan President Nicolas Maduro was detained by the United States in January. Now, Iran’s Supreme Leader Ali Khamenei has passed away. These two military actions not only deprived China of strategic partners in South America and the Middle East, but also attacked something far more important to China: oil.
Both countries supply most of their crude oil to China, according to data analysis firm Kpler. More than half of Venezuela’s oil exports and nearly all of the oil shipped by Iran likely went to China last year, according to data analysis firm Kpler.
Together, the two countries account for about 15% of China’s oil imports, according to CNN calculations based on data from Columbia University’s World Energy Policy Center.
Rob Summell, portfolio manager at Tortoise Capital, sees China as a potential major loser in the Iran conflict because it produces far less oil than it consumes.
“Rising prices can affect economic growth, but physical supply is even more important as China relies on crude oil imports to sustain its economy,” he said.
Chinese Foreign Minister Wang Yi called the US and Israeli attack on Iran “unacceptable” and condemned the “blatant killing of a sovereign leader and incitement to regime change.” But the Chinese government has so far not commented on the potential economic impact.
In addition to disrupting oil supplies, China and other Asian economies would also face potential logistical challenges if the Strait of Hormuz, a key shipping route for crude oil from countries including Saudi Arabia and Kuwait, were to be closed or disrupted.
Iran’s semi-official Mehr news agency reported on Sunday that a tanker was damaged and sinking after it was rammed after attempting to “unauthorizedly transit the Strait of Hormuz.”
Iran controls the northern part of the strait and has previously threatened to cut off access to the waterway during its conflict with the United States. Analysts have warned that the closure of the Strait of Hormuz, or major disruption there, could trigger a major global energy crisis.
CNN’s David Goldman and Simone McCarthy contributed to this post.
