Tensions near the Strait of Hormuz threaten shipping routes vital to China’s oil imports, exposing risks to its economy and manufacturing sector.
News Analysis
U.S. and Israeli strikes on Iran are disrupting global oil shipping, threatening energy supplies and hitting China, the world’s largest oil importer.
Over the past week, tensions around the Strait of Hormuz—a critical gateway for Middle Eastern energy exports and a major chokepoint for global shipping—have pushed oil prices higher, prompted some insurers to withdraw their war-risk coverage, and forced shipowners to reconsider whether it is safe to sail through the Persian Gulf.
Analysts told The Epoch Times that how serious the impact is depends on the duration of the conflict. If tensions ease and shipping routes stabilize, the economic effects may remain limited. But if the conflict drags on—or access to the strait remains restricted—China’s heavy reliance on oil from Persian Gulf producers adds extra pressure to the situation for the country.
The Strait of Hormuz is a thin corridor between Iran and Oman that connects the Persian Gulf to the Indian Ocean. Roughly a fifth of global oil and gas moves through it, making it one of the world’s most important energy chokepoints.
Since the U.S.–Israel strikes, Iran’s Islamic Revolutionary Guard Corps has threatened to attack ships entering the Strait of Hormuz while broadcasting messages to maritime traffic that passage would not be tolerated.
Even without a formal blockade, shipping can grind to a halt if insurers won’t provide coverage. Marine insurers have canceled or sharply tightened war-risk cover for parts of the Gulf, and many ships have chosen to wait outside the strait rather than enter the high-risk zone.
Markets reacted swiftly. Brent crude traded around $92 a barrel on March 6, levels not seen since September 2022, amid fears of a wider conflict in the Middle East.
Freight costs also jumped.
London Stock Exchange Group shipping data shows the benchmark freight rate for Very Large Crude Carriers (VLCCs) from the Middle East Gulf to China jumped to a record $423,736 a day on March 2, up 94 percent from $218,154 on Feb. 27 and more than four times last year’s roughly $100,000-a-day average.
Several major carriers, such as Hapag-Lloyd and MSC, have started suspending transits, delaying sailings, or rerouting vessels serving Persian Gulf ports as security risks rise.
China’s COSCO Shipping Lines, for example, has issued customer advisories warning that services in the Gulf could face restrictions and disruptions tied to the situation.
By Sean Tseng
