Key Highlights

  • China's two-decade push to reduce dependence on imported oil and gas has left it far less vulnerable to the Iran war than other countries in the region
  • The country imports 10 percent of its coal but 40 percent of its gas and more than 70 percent of its oil, prompting sustained efforts to boost domestic production and diversify Supply routes
  • China's stockpile of Crude Oil is estimated at more than 1 billion barrels, enough to fully replace imports for over 100 days
  • Electric vehicles are already displacing about 1 million barrels per day of gasoline and diesel Demand in China, a figure expected to quadruple by 2035

Two Decades of Energy Diversification Pays Off Amid Iran War

China's policymakers have spent two decades working to reduce the country's dependence on imported oil and gas and the vulnerability that dependence creates in the event of a naval blockade during a future conflict. That vulnerability was described by former President Hu Jintao in 2003 as the "Malacca Dilemma," reflecting concern that other major powers could gain a stranglehold over China's energy route by controlling the Strait of Malacca.

Since then, Beijing's strategy has combined a modernized navy focused on protecting supply routes with efforts on the energy side to boost domestic production, encourage efficiency, expand electric vehicle adoption, diversify Import sources, and build up large strategic reserves. Because China's military planning centred on a potential conflict over Taiwan and the Strait of Malacca, the country has emerged far less exposed to the war in the Middle East than many of its regional neighbours, largely avoiding the price spikes and rationing that have affected other parts of Asia.

Domestic Output and Electrification Reduce Import Reliance

China's resource base is considered rich in coal but poor in oil and gas, with the country importing 10 percent of its coal, 40 percent of its gas, and more than 70 percent of its oil. To narrow that gap, Beijing has encouraged greater gas production from regions including Sichuan, Xinjiang, Shaanxi and Inner Mongolia, while exploring for oil in the Bohai Sea and deploying renewables such as hydro, wind and solar alongside coal as a security "ballast."

Electrification has also played a significant role. Electric vehicles and other new energy vehicles have been deployed faster in China than anywhere else, already displacing around 1 million barrels per day of gasoline and diesel demand. According to the International Energy Agency, that figure is expected to quadruple to more than 4 million barrels per day by 2035, with the country's official five-year plan assuming oil consumption will peak before the end of the decade.

Diversified Supply Routes and Massive Stockpiles Provide a Buffer

Beijing has also worked to diversify its supply routes, cultivating relationships with a broad range of exporters. Before the war, China imported nearly 60 percent of its crude from the Middle East, a considerably lower share than other regional economies. It obtained just 17 percent of its imported gas by sea from the Middle East, with most of the remainder arriving from Russia and Australia, and nearly half of gas imports coming by pipeline from Russia and Central Asia, making them immune to any blockade.

China has amassed one of the world's largest crude oil stockpiles, with an exact size kept secret but estimated at more than 1 billion barrels — enough to fully replace imports for more than 100 days. Crude imports fell by more than 1.3 million barrels per day in the first half of 2026, yet domestic fuel supplies have remained broadly stable as the country drew on those reserves. Other countries in the region, most of which had far lower stockpiles heading into the conflict, are now planning significant increases in stockpiling to guard against future supply disruptions, having learned lessons China applied over the past two decades.