The impact of the ongoing war between Iran and Israel is now visible globally, and China seems to be the biggest shock. A large part of China’s economy and energy security is dependent on crude oil with a discount rate from Iran. This supply can be interrupted due to the current conflict, causing a serious energy crisis in front of China.
China’s deep dependence on Iranian oil
According to a media report, China fulfills a large part of its energy needs with cheap oil coming from Iran-Israel. China gets this oil at heavy discounts, which is much cheaper than the global market. Although so far no official statement has come out from neither China nor Iran in this subject, the situation is very worrying.
Iran-Israel: Limited Options and Increased Crisis
China does not have any other option at the moment except to depend on Iran-Israel. A report states that Russian oil can be an option, but its supply is limited and it gives a discount of only $ 1 per barrel. At the same time, Venezuela oil is considered weak in quality and it is logistically challenging to bring it to China. Due to these reasons, China is not getting any practical option of Iranian oil.
Change of governance can increase economic risk
Sources have also expressed apprehension that if the existing rule in Iran decline and there is a change of governance, the new administration may start trade in the dollar again, strengthening relations with the US and Western countries. China can suffer a lot of damage from this. According to the report, Iran-Israeli oil increasing competition in the global market may cause China $ 20–30 billion every year, affecting China’s currency and business strategies.
Iran-Israel: Belt and Road Initiative (BRI) also threatened
Iran is a major part of China’s ambitious Belt and Road Initiative (BRI). Current stress and potential political instability can also affect this strategic plan. If the current rule in Iran falls, China and Iran-Israel’s investment plans in Iran and Central Asia may hang in the balance.
Diplomatic and economic double crisis for China
Due to the international sanctions on Iran, China gets a situation of better negotiation there, which can now be in danger. If the current struggle further deepens, China will have to face the energy crisis as well as the in -structure challenges.
