The Strait of Hormuz Conflict Directly Impacts the Global Economy —Especially China

Luis Augusto Medeiros Rutledge

Energy Geopolitics

When a geopolitical crisis erupts in the Strait of Hormuz, its effects begin in the Gulf but quickly spread across the global economy. It is one of the world’s main logistical chokepoints, through which a significant share of international oil and gas trade flows. As such, any disruption immediately affects prices, trade flows, and market expectations.

In this context, China tends to be among the first major economies affected, emerging as one of the most vulnerable actors in the short term. The shock initially manifests in its refineries, pressured by rising imported oil costs, and in its external accounts, with a significant increase in the energy bill. At the same time, there are indirect effects on the export sector, which is already operating under weakened global demand, reducing margins, competitiveness, and growth momentum.

Highly dependent on energy imports and heavily exposed to the Gulf, Beijing faces a direct shock to its industrial costs, inflation, and trade balance. From a geopolitical perspective, this pressure pushes the country to intensify its engagement in the Middle East, expanding strategic partnerships, diversifying routes, and strengthening its diplomatic and economic presence to ensure supply security.

As the crisis persists, its effects cease to be regional and take on a broader, systemic character, disrupting supply chains, increasing logistical costs, and amplifying volatility in energy markets, with direct repercussions on inflation, economic activity, and financial stability on a global scale.

Russia tends to interpret the situation through a different lens: rising energy prices generate, in the short term, increased revenues, improved fiscal cash flow, and additional stimulus to exports. This dynamic can provide immediate relief to the treasury and temporarily sustain activity in strategic sectors.

However, this benefit is inherently temporary. In a global environment of economic slowdown, with weakened demand and increased investor risk aversion, initial gains tend to dissipate. Dependence on energy revenues, combined with structural and geopolitical constraints, may turn this short-term boost into a source of vulnerability in the medium and long term.

Beijing and Moscow position themselves unevenly in the face of the same crisis. Beijing faces an immediate energy shock, with direct impacts on industrial costs, inflation, and trade balance. Moscow, in contrast, benefits from a cyclical gain that is likely to reverse gradually as global demand cools and the cumulative effects of economic instability become more evident.

China: Energy Pressure, Growth Model, and Geopolitical Implications

China, the world’s largest oil importer, enters this crisis scenario with high sensitivity to external shocks. Estimates from the U.S. Energy Information Administration indicate that in 2024 the country imported around 11.1 million barrels per day, compared to consumption of approximately 16.3 million barrels per day of petroleum liquids, highlighting a significant structural gap between domestic production and demand.

This dependence, however, does not translate into exposure to a single supplier. China has built a diversification strategy in recent years, with Russia and Saudi Arabia as its main partners, each accounting for less than 20% of imports. At the same time, Beijing has expanded its energy relationship with Iran, absorbing a significant share of its oil exports, reinforcing its pragmatic approach—often misaligned with Western sanctions.

Still, diversification does not eliminate the so-called “Hormuz effect.” The Strait of Hormuz remains a critical bottleneck for global energy flows, and a substantial portion of China’s imports passes directly or indirectly through this route. In a disruption scenario, China would face not only physical supply constraints but also intensified competition with other Asian economies for alternative sources, putting pressure on prices, logistics, and long-term contracts.

From an international relations perspective, this context reinforces China’s strategy to enhance its energy security on multiple fronts: strengthening bilateral partnerships with producers across different geopolitical alignments; expanding investments in infrastructure and alternative routes under the Belt and Road Initiative; and accelerating its domestic energy transition, gradually reducing the carbon intensity of its growth model.

At the same time, increased exposure to unstable regions such as the Gulf tends to expand Beijing’s diplomatic and strategic engagement in the Middle East, including in maritime security and regional stability issues. Thus, China’s energy vulnerability is not merely an economic factor, but a central driver of its foreign policy, with direct implications for trade, alliances, and the balance of power in the international system.

In this sense, the conflict in Hormuz acts as a catalyst for a broader reconfiguration of international relations. On one hand, it intensifies competition for energy resources and routes; on the other, it accelerates diversification and energy transition strategies. China and Russia, although affected in different ways, become key actors in a new geopolitical balance in which energy security, economic power, and strategic influence are increasingly intertwined.

Luis Augusto Medeiros Rutledge is a Petroleum Engineer and Energy Geopolitics Analyst. He holds an Executive MBA in Oil and Gas Economics from the Federal University of Rio de Janeiro (UFRJ) and a postgraduate degree in International Relations and Diplomacy from IBMEC. He works as a researcher at UFRJ, is a consulting member of the Observatory of the Islamic World of Portugal, a consultant for the Center for Foreign Trade Studies Foundation (FUNCEX), a columnist for the website Mente Mundo Relações Internacionais, and the author of numerous published articles on the energy sector.