With the steady increase in domestic consumption in China, the country now imports more than nine million barrels of American oil per day and even more natural gas.
So with the US closing the tap on Iran and starting a trade war, the solutions of a country as big as China could redraw the markets, according to the Financial Times.
Nick Butler, a member of the Policy Institute of King’s College London, explains to the Middle East Headlines News team that at present there are two tools that the United States uses to claim its power.
On the one hand, tariffs with China “that affect everything from washing machines to rice, to baseballs.”
On the other hand, sanctions against Iran that prohibit third countries from trading with the Persian nation if they do not want to suffer the consequences. Initially, these sanctions temporarily excluded a whole range of countries, including India and China. But since May that grace period has ended. It is precisely the fact that it is now more difficult for Iran to extract revenue from its oil, which will harm China.
“Chinese oil imports have increased rapidly over the past decade, with more than 300 million diesel or gasoline vehicles registered in the country, as well as rising air consumption, which has become inherent to the activity. economic and is essential to meet the consumption needs of the growing Chinese middle class, “warns the professor of King’s College London.
And what do sanctions have to do with Iran?
44% of China’s oil imports come from the Middle East. And as the United States eventually becomes more and more self-sufficient energetically thanks to the ‘boom’ of its oil and its shale gas, Middle East oil ends up mostly in Asia, and not in the United States. “If Iran is cut off trade with its oil through sanctions or through a conflict that closes the Strait of Hormuz, China will be among the first to suffer the consequences,” Butler warns.
China ceases purchases of Iranian oil
The situation is aggravated because there is no indication that the conflict between Iran and the US is resolved. Donald Trump rejected the agreement reached between his country and Tehran in 2015. Both countries have a long history of decades of bad relationships. Difficult it will be that something other than a profound change of government will satisfy Washington, Butler warns.
“In the short term, China is most likely to buy all the oil it needs, which will undoubtedly push oil prices up all over the world.” The country’s imports exceeded 10 million barrels per day in April. , probably to increase the reserves in case there is a crisis, “he reasons.
China’s energy dependence translates into exports.
Exports of energy sources have been key to the Asian giant’s economic success. If he wants to follow the same success track, China “will probably adopt a more mercantilist policy,” says the professor. Which in turn translates into more bilateral agreements between countries, bargaining prices and offering everything that China can offer: from cheap loans to political support and military equipment.
“A serious bilateral American oil trade plan would include investing and being the direct owner of the sources [of energy] and the accelerated development of Chinese companies in multinationals capable of finding and producing energy resources throughout the world.”
“For the rest of the world, that movement will be dangerous,” he adds. Because if you start to get some nine or 10 million barrels of crude a day through the signing of bilateral agreements, the market that remains will be smaller and probably more volatile, concludes.
