India’s reliance on crude oil imports is at approximately 90%, with Middle Eastern nations supplying more than 40% of these imports. (AI image)

Why is the Strait of Hormuz important?

The Strait of Hormuz serves as a crucial maritime connection between the Persian Gulf and the Arabian Sea, extending into the Indian Ocean.

This vital waterway, with its narrowest section at just 21 miles (33 kilometres), has Iran to the north and the Arabian Peninsula to the south.

The navigable channels are considerably restricted, extending only two miles in either direction, which creates vulnerability to potential blockades and hostile actions.

The Strait of Hormuz holds immense strategic and economic significance, particularly as a mandatory route for oil vessels departing from Persian Gulf ports.

This maritime passage facilitates the transportation of one-fifth of global oil and gas supplies. Statistics from the US Energy Information Administration (EIA) indicate that in 2024, the daily transport volume reached 20.3 million barrels of oil and 290 million cubic metres of LNG.

How will the closure of Strait of Hormuz impact India?

India imports 5.5 million barrels per day (bpd) of crude oil, with 2 million bpd passing through this strategic waterway. However, experts suggest that India’s position remains secure due to its diversified import strategy, with alternative suppliers including Russia, the United States and Brazil available to maintain supply continuity. The Russian oil supply remains unaffected by Hormuz-related disruptions, as it uses alternative routes including the Suez Canal, Cape of Good Hope, or Pacific Ocean pathways. Similarly, supplies from the US, West Africa, and Latin America, though more expensive, serve as viable alternatives. Regarding gas supplies, India’s primary supplier Qatar delivers without using the Strait of Hormuz for Indian shipments. Additional LNG sources from Australia, Russia and the US remain accessible regardless of any Strait of Hormuz closure . However, analysts predict that increasing tensions in this significant energy supply region could cause short-term price fluctuations, potentially pushing oil prices towards $80 per barrel. India relies on imports for 90% of its crude oil requirements and sources approximately half of its natural gas from international markets. The imported crude oil undergoes refining to produce petrol and diesel, while natural gas serves multiple purposes including power generation, fertiliser production, CNG for vehicles, and domestic cooking gas supply. India obtains approximately 40% of its oil requirements from Middle Eastern countries including Iraq, Saudi Arabia, the United Arab Emirates, and Kuwait, with shipments travelling through the Strait of Hormuz. Russia has become a significant oil supplier to India, with current imports exceeding the total imports from Middle Eastern nations. According to preliminary trade data from Kpler, Indian refineries imported 2-2.2 million bpd of Russian crude oil in June, surpassing the combined imports of about 2 million bpd from Iraq, Saudi Arabia, the UAE and Kuwait, marking the highest level in two years. Additionally, imports from the United States increased to 439,000 bpd in June, showing substantial growth from 280,000 bpd in the previous month. Although current supplies remain stable, vessel movements indicate a reduction in crude loadings from the Middle East in the forthcoming period. Vessel operators are showing reluctance to dispatch empty tankers (ballasters) to the Gulf, with numbers decreasing from 69 to 40, whilst MEG-bound signals from the Gulf of Oman have reduced by half. Kpler reports quoted by PTI indicate potential tightening of MEG supplies in the immediate future, possibly necessitating adjustments to India’s procurement strategy, noting significant changes in India’s import patterns over the past two years.

In the event of escalating tensions or temporary Hormuz disruptions, Russian oil supplies could increase, providing both availability and cost advantages. India has options to diversify its oil imports from the United States, Nigeria, Angola, and Brazil, despite higher transportation expenses.

Will oil prices rise?

Iran-Israel war & Strait of Hormuz: With escalating tensions between Iran and Israel, especially after the US bombed nuclear facilities in Iran earlier today, there are rising fears of the Strait of Hormuz being closed. The Strait of Hormuz is a crucial maritime passage handling 20% of global oil and gas transportation.According to state-run media, Iran’s Parliament has approved the closure of Strait of Hormuz and the final decision will be taken by Iran’s Supreme National Security Council.What will be the impact of the potential closure of the Strait of Hormuz? And importantly, how will India be hit? We take a look:The major oil-producing nations of the region – Saudi Arabia, Iraq, UAE, Qatar, Iran, and Kuwait – rely on this passage for their exports.Whilst historical concerns about disruptions to Persian Gulf energy flows majorly affected Western nations, particularly the US and Europe, in today’s situation the implications would most significantly impact China and Asian countries.Based on EIA data quoted by PTI, Asian nations received 8% of crude oil and condensate shipments through the Strait of Hormuz in 2022. India, China, Japan, and South Korea collectively made up 67% of total flows during 2022 and the firstl six months of 2023.Also Read | ‘Highest in two years’: India increases oil imports from Russia, US amidst Iran-Israel war; why it’s about strategic positioning, not panic India’s reliance on crude oil imports is at approximately 90%, with Middle Eastern nations, whose exports pass through the Strait of Hormuz, supplying more than 40% of these imports.EIA reports indicate that during the first quarter of 2025, China’s crude imports via the Strait of Hormuz reached 5.4 million bpd. India received 2.1 million bpd, whilst South Korea and Japan imported 1.7 million bpd and 1.6 million bpd respectively.The IEA has emphasised that any interference with the flow through the Strait would significantly impact global oil markets.India can utilise its strategic petroleum reserves, which cover 9-10 days of imports, to manage any supply gaps. To control inflation during price surges, particularly for diesel and LPG, the government maintains the option of implementing price subsidies.Global oil prices saw a sharp increase after Israel launched attacks targeting Iranian military commanders, homes, military installations and nuclear facilities on June 13. Iran retaliated by firing numerous ballistic missiles. This heightened tension caused oil prices to rise substantially, as concerns grew about geopolitical instability and potential supply chain disruptions.The benchmark Brent crude oil has reached $77 per barrel, marking a 10 per cent increase since the onset of hostilities.According to oil market specialists at Goldman Sachs, prices could potentially rise beyond $90 should the situation deteriorate further. Citigroup analysts project that Brent crude values might approach $90 per barrel in the event of a closure of the Strait of Hormuz.The credit rating organisation Icra indicated that any intensification of regional tensions could have considerable effects on oil prices.Higher oil prices would reduce the profits that state-owned retailers IOC, BPCL and HPCL have built up by maintaining stable retail prices despite previous decreases in international rates.Also Read | Iran-Israel conflict: India keeping tab on Chabahar Port, International North-South Transport Corridor; why it’s important According to Jain of Yes Securities, oil markets remain adequately supplied, supported by OPEC’s 4 million barrels per day spare capacity and a pre-conflict global surplus of 0.9 million bpd. Additional stability comes from US shale production.Global security analysts deem an extended blockage of the Strait of Hormuz unlikely, given the US naval forces in the region. Any such action by Iran would not only impact the oil exports of Saudi Arabia, the UAE, Kuwait and Qatar but would also hamper its own export capabilities.Despite aggressive rhetoric from Iranian conservatives and state media predictions of oil prices reaching $400 per barrel, the international trade analysis organisation Kpler suggests the probability of a complete blockade remains minimal, citing significant deterrents for Iran.Such an action would severely affect China, Iran’s primary oil buyer, which sources 47 per cent of its maritime crude imports from the Middle East Gulf region. As the world’s second-largest economy, China stands as the principal purchaser of Iranian oil, reportedly consuming more than three-quarters of Iran’s oil exports.The fact that Iran relies heavily on the Strait of Hormuz for its oil shipments through Kharg Island, which manages 96% of its exports, makes any self-imposed blockade counterproductive to its interests.(This is a top Google Trends topic)

Will Israel-Iran ceasefire hold? Analyst says both sides have strong incentives

toggle caption Chris McGrath/Getty Images

A shaky ceasefire between Israel and Iran began to take hold Tuesday under pressure from U.S. President Donald Trump, raising hopes for an end to the region’s most intense military confrontation in decades.

To understand what’s at stake and what might come next, Morning Edition spoke with Jonathan Panikoff, a former intelligence officer who now directs the Scowcroft Middle East Security Initiative at the Atlantic Council, a Washington-based think tank.

Panikoff says Iran’s military capabilities have been severely degraded and that Israel may be nearing its own limits after days of missile exchanges. He also sees the potential for diplomacy, possibly mediated by countries like Oman or even China. But Panikoff warns that a broader solution to Iran’s nuclear ambitions remains elusive. “The balance of power in the region has certainly shifted towards Israel’s favor and away from Iran,” he said.

Sponsor Message

Panikoff told NPR’s Michel Martin what he sees as Iran’s diminished deterrence, the uncertain future of nuclear diplomacy, shifting regional dynamics and the potential for deeper ties between Russia and Iran.

This interview transcript has been lightly edited for length and clarity.

Interview highlights

Michel Martin: So, Israel and Iran have been adversaries for decades. Just given everything we’ve already heard so far this morning, do you think the conditions are there, or maybe the incentives are there, to actually hold this ceasefire?

Jonathan Panikoff: I think the incentives are certainly there from Iran. Iran has seen its power significantly reduced in the region. It has seen its ability to defend against Israel, frankly, be obliterated. It just did not exist fundamentally in the way that I think even a lot of Iranian officials thought it was going to. And I think for Israel, after years of war in Gaza and certainly the last 12 days, it’s accomplished most of its objectives to really diminish Iran’s ballistic missile program and nuclear program, and may itself be running out of interceptor missiles to defend against Iran’s missile strikes that we’ve seen [going] into Israel, including overnight.

Martin: So, before Israel began bombing Iran, the U.S. was negotiating with Tehran over its nuclear capabilities. Do you think those negotiations will go forward, and what might we expect from them?

Sponsor Message

Panikoff: I think that this is probably going to be the beginning of the end, not the end of the end, presuming the ceasefire holds for this conflict, precisely because Iran’s nuclear program is still a question. President Trump may have significantly destroyed, or at least mostly destroyed, Fordo with the strikes, but there are real questions about whether Iran’s highly enriched uranium was ferried out of the site and whether it could ultimately be spun up in a smaller, secretive site and turned into 90 percent weapons-grade enriched uranium. That would be a real threat to Israel. To manage that, either there will need to be further strikes eventually when those sites are found, or there will still need to be some sort of fundamental diplomatic solution.

Martin: I guess that’s what I’m asking you. Do you think that a pathway to that exists?

Panikoff: I think the pathway probably exists indirectly for now. You can imagine that U.S. mediators, like Oman, maybe Norway or the Swiss, could continue to play a role in bringing the parties back to the table. Or you could even imagine an outside actor like China trying to convince the Iranians to come back. So I think that pathway exists, but it’s going to take quite a lot of cajoling over the coming weeks and months.

Martin: So, let’s broaden it out. Two weeks ago, the balance of power in the Middle East looked very different. How would you describe it now?

Panikoff: The balance of power in the region has certainly shifted toward Israel’s favor and away from Iran. And there’s a reason for that. The Iranian triad, on which its power projections were based, was ballistic missiles, its nuclear program and its proxy network. All three of those, over the last year or so, have been tremendously diminished, especially the latter two in the past two weeks of this war. Now I think Iran is really facing a challenge in terms of how it’s going to move forward. Will it reinvest billions of dollars to rebuild those entities at a time when its economy is struggling, which could lead to even further internal strife? Or will it try a different path, rebuilding some defenses over time, but not reestablishing the same proxy network or nuclear program that has long been a broad threat to the region, including Arab Gulf states?

Sponsor Message

Martin: What about Russia? Russia has been an ally of Iran for years, and of course, I think the world knows Russia has been tied down in its war against Ukraine. It has lost many people, lots of munitions and so forth. What happens to Russia now? What’s its role here?

Panikoff: I think there’s a real reason to be concerned over the long term about whether the nature of the relationship between Russia and Iran, which has largely been transactional, becomes much more strategic. If both Russia and Iran are viewing themselves as isolated on the world stage, they may decide there is more reason to work together. That could mean Russia reengaging with Iran and eventually deciding to provide defense systems again or ballistic missiles again.

Why is China so concerned about Israel-Iran tensions?

toggle caption Getty Images

One country outside the Middle East that’s closely following the war between Israel and Iran, and any possible ceasefire, is China. That’s because China is the largest importer of Iranian oil, and Beijing is a close political partner of Tehran.

Iran currently exports around 90% of its crude oil to China, despite U.S. sanctions designed to cut off Iran’s oil sales, which the U.S. says directly fund Tehran’s military.

Why does China buy so much oil from Iran?

“China has always been the biggest buyer” of Iranian oil, especially after U.S. sanctions on Iran were expanded in 2019, says Muyu Xu, a senior analyst at commodities research firm Kpler.

Sponsor Message

According to Xu’s calculations, China is able to buy the Iranian crude oil at a discount of about 8% compared to the market price, because Iran has few other buyers.

Neither China nor Iran publishes official data on their oil trade, so Xu relies on satellite data and sources on the ground to track oil tankers as they make their way circuitously from Iran to ports in eastern China.

“Before the fall of the Assad regime, Syria used to be the buyer as well. But again, the majority volumes went to China,” says Xu.

“The reason that [China] buys [oil] from Iran is to make sure that the Islamic Republic can survive,” explains Saeed Ghasseminejad, a senior adviser on Iran at the neoconservative think tank Foundation for Defense of Democracies in Washington, D.C. “Before 1979, Iran was the key partner of the United States in the region. Right now, it’s important for China that that Iran does not go back to that, so it doesn’t want the regime to fall.”

This trade has made China and Iran close partners, even if the two countries share few political traits in common. Iran is one of the world’s few countries which allows Chinese tourists visa-free entry, and thousands of Chinese citizens lived in Iran, many of them working for Chinese oil and energy companies. China says it has now evacuated more than 3,000 of its citizens from Iran since Israel’s first strikes on Iran earlier this month.

Sponsor Message

How does China get oil from Iran despite sanctions?

The Iranian oil is transported to China by what Elisabeth Braw, a senior fellow at the Atlantic Council, calls a “dark fleet” of ships.

“It’s simply vessels that sail outside the official shipping system,” Braw says. “They are often aging vessels… that have owners that are very hard to identify.”

Then, the oil is often transferred from ship to ship at sea and relabeled as coming from Malaysia or Oman. The crude is eventually brought to small, private refineries in China. The willingness of such refineries in China to defy American sanctions on buying Iranian oil has been an economic lifeline for Tehran.

China does not have a global military, meaning it does not have the capacity to send military might to Iran, but it wields considerable political influence in Tehran. Secretary of State Marco Rubio acknowledged Beijing’s political leverage in an interview with Fox News earlier this week. Referring to the possibility of Iran closing off the Strait of Hormuz, he said, “I would encourage the Chinese government in Beijing to call them about that because they heavily depend on the Straits of Hormuz for their oil.”

Much of the world’s oil from the Middle East is shipped to China and the U.S. through the Strait of Hormuz, along Iran’s southern coast.

After announcing a ceasefire between Israel and Iran on Monday, President Trump posted Tuesday morning on social media, “China can now continue to purchase Oil from Iran. Hopefully, they will be purchasing plenty from the U.S., also. It was my Great Honor to make this happen!”

Could China get its oil from elsewhere?

China could easily replace the oil it imports from Iran — though its refineries would take a big commercial hit, says Xu from Kpler.

Sponsor Message

According to research firm S&P Global, China actually buys slightly more oil by volume now from Russia, which has also come to rely on Beijing for economic support after it faced Western sanctions due to its full-scale invasion of Ukraine.

China could also turn to Venezuela and oil-rich countries in West Africa, but this would cost billions of dollars more a year.

However, in a country as large and fractious as China, some of China’s state-affiliated oil refineries are rooting for the end to China’s sanctions-busting trade with Iran.

Much of the Iranian and Russian oil that Chinese customers buy does not go to the country’s larger state-owned oil companies. It instead goes to what analysts term “teapot” refineries — small-scale, privately owned facilities. Nearly all are located in China’s Shandong province and they make at least a fifth of China’s refining capacities, according to commodities analysts.

These “teapot” refineries work on slim margins and are willing to take the legal risks to buy sanctioned oil because of its lower price.

China’s central government has been trying to shut down excess oil-refining capacity and smaller refineries, like teapots, for years.

“For the state-owned refinery, they’re happy to see that consequence. They want to take that market share,” says Xu, referring to teapots losing access to Iranian crude and shutting down.

Plus, for the last half-year, China has been stockpiling oil. By Xu’s estimate, it now has about 1.1 billion barrels of oil stored up, equivalent to more than 70 days of use.

“That’s the record high based on our data,” says Xu. The stockpile is enough to buy China some time to wait out whatever happens over the next few weeks in the Middle East.

Tehran’s friends don’t like the war decimating Iran, but they’re not ready to join the fight against Israel—and now the U.S., after President Donald Trump bombed Iranian nuclear facilities. Instead, Russia and China have urged deescalation, emphasizing the dangerous consequences the escalating conflict could have on the whole world. “If the Middle East is unstable, the world will not be at peace,” Chinese President Xi Jinping said June 19. “If the conflict escalates further, not only will the conflicting parties suffer greater losses, but regional countries will also suffer greatly.”

Advertisement Advertisement

“The warring parties, especially Israel, should cease fire as soon as possible to prevent a cycle of escalation and resolutely avoid the spillover of the war,” Xi added. Xi’s comments came in a call with Russian President Vladimir Putin, in which both leaders called for a ceasefire, according to a readout by China’s foreign ministry. Earlier last week, Russia warned that Israel’s attacks have brought the world “millimeters” from nuclear calamity, and Putin urged Trump against attacking Iran. Kremlin aide Yuri Ushakov told reporters that Putin and Xi “strongly condemn Israel’s actions, which violate the U.N. Charter and other norms of international law.” Ushakov added that Xi expressed support for Putin’s suggestion to mediate the conflict, an offer Trump said he has rejected. China, like Russia, has also positioned itself as a potential peacebroker, though experts say it’s unlikely Israel would accept Beijing as a neutral conciliator, given its past criticisms of Israel and ties with Iran.

Advertisement

Here’s what to know about how China has responded so far to the conflict and what it may see is at stake. Rhetorical but not material support “Iran doesn’t need communiqués or declarations, but concrete help, like anti-aircraft systems or fighter jets,” Andrea Ghiselli, a Chinese foreign policy expert at the University of Exeter, told France 24. But communiqués and declarations are all China is likely to offer, experts tell TIME. William Figueroa, an assistant professor of international relations at the University of Groningen, tells TIME that China’s lack of military support should not come as a surprise. China has historically followed a policy of non-interference, focusing more on domestic issues while aiming to avoid entanglement in protracted foreign conflicts. Earlier this year, China similarly called on both India and Pakistan, the latter being an “ironclad friend” of China, to show restraint. And while it has been accused of providing “very substantial” support to Russia in its war against Ukraine, China has maintained that it doesn’t provide weapons or troops to its neighbor. (Reports suggest, however, that its material support has included lethal systems.)

Advertisement

White House Press Secretary Karoline Leavitt said Thursday that the White House doesn’t see “any signs” of China providing military support to Iran “at this moment in time.” Secretary of State Marco Rubio said Sunday on Fox News that so far there has been no evidence of material support from China to Iran. “We don’t have any evidence that the Chinese were involved in anything, other than perhaps trying to get Chinese nationals out of Iran,” Rubio said. Instead, China has mostly offered just words. China’s Ambassador to the United Nations Fu Cong said the U.S. attacks on Iran “seriously violate the purposes and principles of the UN Charter and international law, as well as Iran’s sovereignty, security and territorial integrity.” “The international community must uphold justice and make concrete efforts to cool the situation and restore peace and stability,” he added. “The Security Council shoulders the primary responsibility for the maintenance of international peace and security. It cannot stand idly by in the face of a major crisis.”

Advertisement

China, Russia, and Pakistan put forth a draft resolution to the United Nations Security Council calling for an immediate and unconditional ceasefire ahead of the Sunday emergency meeting. The resolution, which was seen by Reuters, does not name the U.S. or Israel but condemns attacks on Iran’s nuclear sites and facilities. It is likely to be vetoed by the U.S. Beijing has been “harshly critical” of Israel, says Figueroa. In separate calls with his Iranian and Israeli counterparts over the past weekend, after Israel launched an attack on Friday against Iran, Chinese Foreign Minister Wang Yi stressed that China “explicitly condemns Israel’s violation of Iran’s sovereignty, security and territorial integrity.” It had also publicly advised the U.S. against greater involvement in the conflict. “The heating up of the Middle East region serves no one’s interests,” Chinese foreign ministry spokesperson Guo Jiakun said on Tuesday. “To fan up the flames, use threats and exert pressure does not help deescalate the situation and will only aggravate tensions and enlarge the conflict.”

Advertisement

“The international community, especially influential major countries, should uphold a fair position and a responsible attitude to create the necessary conditions for promoting a ceasefire and returning to dialogue and negotiation so as to prevent the regional situation from sliding into the abyss and triggering a greater disaster,” a Chinese state-media editorial declared on Thursday. China’s diplomatic response reflects its priority to “lower the temperature,” says Figueroa, particularly in tensions with the U.S. Diplomatic limitations China has sought to deepen its investments and influence in the Middle East over the years, which has raised the expectations of its regional diplomacy to “sky high” levels, says Figueroa. China has also signaled its desire to step forward as a world leader and peacebroker amid a U.S. retreat from global institutions under Trump. Just last month, China launched the International Organization for Mediation (IOMed), a new intergovernmental dispute resolution body in Hong Kong that proposes to fill an “institutional gap.”

Advertisement

But while Beijing touted brokering a historic truce between Saudi Arabia and Iran in 2023, the task before it now is much taller. Wang, the Chinese foreign minister, said China is “ready to play a constructive role” in resolving the conflict, according to foreign ministry readouts of his calls with both Iran and Israel, but unlike with Saudi Arabia and Iran, Figueroa says, Israel has expressed no interest in negotiating a resolution. And even if Israel was interested in coming to the table, China is unlikely to be seen as a neutral arbiter given its ties with Iran, criticisms of Israel including over Gaza, and ongoing global power competition with the U.S., Israel’s biggest ally. China has developed strong economic ties with Iran over the years, becoming Iran’s largest trading partner and export market, especially for oil—a critical lifeline for Iran as the U.S. has placed severe economic sanctions on the country. Iran joined BRICS, the intergovernmental group China has viewed as an alternative collective of emerging powers to the Western-oriented G7, in 2024; joined the Shanghai Cooperation Organization, a Beijing-backed security group, in 2023; and the two countries signed a 25-year cooperative agreement in 2021.

Advertisement

While China has also maintained an economic relationship with Israel—China is Israel’s second-biggest trading partner and the two countries have had an “innovative comprehensive partnership” since 2017—Figueroa says it’s “not close enough to have a serious influence over Israel’s actions.” When asked about the possibility of China acting as a mediator, Israel’s Ambassador to Beijing Eli Belotserkovsky told the South China Morning Post on Wednesday, “at this stage, we are concentrating on the military campaign. This is our main concern at the moment, and we need to see how things will develop.” Still, he added that Israel would “continue talking to China as [part of] an ongoing process.” Failure to help bring peace to the Middle East could seriously dampen China’s recent efforts to portray itself as an effective global peacebroker, especially after Ukraine already rejected a peace plan Beijing had proposed in 2023. And if Iran’s regime falls, Marc Lanteigne, an associate professor of political science at the Arctic University of Norway, told France 24, the China-mediated truce with Saudi Arabia would also risk “going up in smoke.”

Advertisement

“It is hard to predict how the conflict itself might impact [China’s diplomatic] efforts,” Figueroa says. “A wider conflict would undoubtedly complicate Chinese diplomatic efforts, which largely rest on their ability to provide economic development.” Economic concerns While the Iran-China trade balance is largely skewed in China’s favor—around a third of Iranian trade is with China, but less than 1% of Chinese trade is with Iran—China is heavily dependent on the Middle East’s oil. “China is by far the largest importer of Iranian oil,” according to a statement in March by the U.S. State Department, which added: “The Iranian regime uses the revenue it generates from these sales to finance attacks on U.S. allies, support terrorism around the world, and pursue other destabilizing actions.” Sara Haghdoosti, executive director of public education and advocacy coalition Win Without War, tells TIME that China “has a vested interest in seeing the conflict end before Israel strikes more of Iran’s oil infrastructure.”

Advertisement

But China is less dependent on Iran itself than on access to the region’s reserves. “The Islamic Republic is a replaceable energy partner,” according to a Bloomberg analysis. For global oil markets too, changes to Iran’s supply alone are unlikely to cause significant price disruptions. “Even in the unlikely event that all Iranian exports are lost, they could be replaced by spare capacity from OPEC+ producers,” assessed credit agency Fitch Ratings earlier this week. Around 20% of the world’s oil trade, however, passes through the Strait of Hormuz, which Iran previously threatened to close and, after the attacks on its nuclear facilities, passed a parliamentary resolution on Sunday to shut it down—a decision that will ultimately lie with Iran’s National Security Council. “If the United States officially and operationally enters the war in support of the Zionists, it is the legitimate right of Iran in view of pressuring the U.S. and Western countries to disrupt their oil trade’s ease of transit,” said Iranian lawmaker Ali Yazdikhah on June 19, according to state-sponsored Iranian news agency Mehr News.

Advertisement

Doing so would also impact China, for which more than 40% of crude oil imports come from the Middle East. The conflict’s “greatest impact on China could be on energy imports and supply chain security,” Sun Degang, director of the Center for Middle Eastern Studies at Fudan University, told the South China Morning Post. “While Beijing will continue to condemn the conflict, it will also seek to balance ties with Israel and the Gulf states and promote stable energy flows,” according to Bloomberg’s analysts, especially as surging commodity prices would exacerbate domestic economic growth challenges already hampered by the trade war with the U.S. and an ongoing real estate crisis. That mutual dependence could be handy for the U.S. as it urges Iran to not escalate things further after the latest strikes on its nuclear facilities. Rubio told Fox News on Sunday that he encourages the Chinese government, “because they heavily depend on the Strait of Hormuz for their oil,” to advise Iran against closing the strait.

Advertisement

In response to a question about the potential interruption of Iranian oil supplies to China, Chinese foreign ministry spokesperson Guo Jiakun reiterated on Tuesday the need to “ease tensions as soon as possible” in order to “prevent the region from spiraling into greater turmoil.” A contained conflict could be good for China “If a wider conflict breaks out,” Figueroa says, “the impact on China’s economic projects and investments in the region would be significant.” Foreign policy analyst Wesley Alexander Hill noted in a Forbes op-ed that an escalated conflict could force China into a bind between taking “decisive action” to defend Iran, which might alienate Saudi Arabia, or doing nothing militarily and letting Israeli and potentially U.S. attacks “continue to degrade Iranian export capacity,” which would leave other regional partners with a “dim view [of] what Chinese commitment under pressure looks like.”

Advertisement

Still, some analysts have suggested that China—as well as Russia—may be content for now to sit back and let things play out, with their higher priorities clearly elsewhere.

According to Bloomberg Economics analyst Alex Kokcharov, a contained conflict in the Middle East could “distract Washington from strategic competition with China.”

Added Bloomberg’s bureau chief in China, Allen Wan, in a newsletter Friday: “Should the U.S. once again get tangled up in a war in the Middle East, that’d probably suit China just fine. Beijing and the [People’s Liberation Army] would appreciate the chance to squeeze Taiwan tighter.”

“At very least, both powers [Russia and China] are content to watch the U.S. further squander goodwill with gulf Arab partners by backing another destabilizing conflict in the region,” Haghdoosti, the Win Without War executive director, tells TIME. And they, she adds, are likely “shedding no tears that the U.S. military is currently burning through stocks of difficult-to-replenish missile defense interceptors to shield Israel.”

Beijing should adopt a more proactive fiscal policy in response to rising global uncertainties, particularly following the outbreak of war in the Middle East, a central bank adviser said on Tuesday.

Advertisement

While many Chinese economists agree that fiscal discipline is essential for long-term sustainability, current circumstances may call for a different approach, said Huang Yiping, dean of Peking University’s National School of Development.

“What we see at the moment is rising uncertainties. We are very much worried about deglobalisation, trade, protectionism and so on,” he told a panel at the Summer Davos forum in Tianjin.

“If whatever outside uncertain factors cause a downturn of the domestic economy, I personally would be very much in favour of a proactive fiscal policy.”

Huang’s remarks came amid heightened geopolitical tensions, including recent clashes between Israel and Iran. The conflict has raised concerns about global economic stability, with Tehran threatening to block the Strait of Hormuz – one of the world’s most critical shipping lanes.

Advertisement

On Monday, US President Donald Trump said that Israel and Iran had agreed to a “complete and total ceasefire” set to take effect within 24 hours. Both Iranian state television and the Israeli Prime Minister’s Office confirmed the truce on Tuesday.