The Prospect Of Weaponizing Oil Against China

U.S. Defense Department officials have been busy spreading the message that in the event of an intensified conflict with China, CENTCOM could cut off China’s oil imports by blocking oil shipments through the Strait of Hormuz, most notably, along with some other chokepoints. In terms of potential foreign policy stances, this isn’t the 1940s anymore—this a world of entrenched globalization, and the knock-off effects of such a move would have far-reaching consequences well beyond any sanctions on Russian oil over Ukraine.

The argument being circulated by certain DoD officials is this: Because some 98% of China’s energy imports from the Middle East traverse the Strait of Hormuz, cutting off this chokepoint would do severe damage to Beijing, and CENTCOM is positioned to step in.

The variables to consider here are many and varied. First, China is increasing its intake of discounted Russian crude as a fairly fast clip, though the Saudis remain China’s top oil exporter. China’s imports from Russia rose nearly 9% in April alone, year-over-year. Year-to-date imports from Russia rose 26.5% to 32.4 million tonnes, compared to Saudi imports, which were up 2.9% to 31.28 million tonnes.

Source: Reuters

Cutting off Middle East oil exports to China would be an immediate boost to Russian oil, of course, and Putin’s war with Ukraine is a long war that will not likely see any resolution. At best, it will become a frozen conflict that leaves no window open for a relaxed sanctions regime.

Beyond this, a U.S. military move on the Strait of Hormuz would ignite the Middle East. If Russia’s war on Ukraine and the Western response was not enough to launch WWIII, cutting off oil in the Strait of Hormuz would.

What would the Saudi response be, at a time when Riyadh has been repairing diplomatic relations with Tehran–the other always-looming threat in the Strait of Hormuz? What would the Saudis do at a time when Chinese influence is spreading throughout the Kingdom?

If we want a global energy crisis on top of this, the U.S. may be far more insulated (as it has been with Russia sanctions), but in an age of globalization, this insulation can protect to a certain extent from the aftereffects of a global economic meltdown. Such a move would, of course, further boost the push for clean energy, though having mega dollars to fund that transition is critical.

Despite the low-brow rhetoric and ideological writings to the contrary, everyone in Washington is hawkish on China. Cutting off the Strait of Hormuz, is the extreme side of this. There is no such thing as a “detente” or a “reset” in the books, or even being discussed in reality.

Even discounting the prospect of WWIII, massive damage would be done to global markets. When Iran attacked two vessels in the Strait of Hormuz in 2019, oil prices immediately shot up 4%. That is merely a tiny taste of the market response to a blockage of China-bound oil shipments. Inventories would soar, forcing OPEC into a major production cut, with the Saudis bearing the brunt of that. Such an attack would be viewed as an attack on Saudi Arabia.

Iran would rally behind the cause for an initial war against the U.S. in the Persian Gulf, solidifying an axis of China, Russia and Iran, with the Saudis and UAE left to choose sides. Iran’s response would be to attack the Strait of Hormuz, through which some 30% of the world’s seaborne crude oil passes, rendering the Strait unsafe and putting Western markets in a state of turmoil, as well.

The Western intelligentsia can talk all they want about Russia’s unethical weaponization of energy against Europe, weaponizing energy against China would be far more significant and dangerous.