You are ordered to keep well clear of this area over >> this is a body of water just over 30 m wide.

But by controlling these 30 m you can effectively hold the entire world hostage.

And by closing off this area you can instantly paralyze the global energy system.

Today this choke point is blocked and it has turned into a massive shipyard.

According to Windward’s March 13th report, approximately 400 ships are waiting just outside the straight of Hormuz in the Gulf of Oman.

Tankers, LNG carriers, dry cargo ships, container ships lined up side by side, none of them able to move.

More than 200 ships have anchored inside the Gulf.

Through this straight, which saw more than 100 ships pass daily before the war, only 21 tankers have managed to pass since February 28th.

On March 14th, the number of transits dropped to zero, a first in history.

Among these 600 ships, there are an estimated 200 to 270 vessels linked to China or carrying cargo to China.

Why do we make this estimate?

Because China is the largest customer, accounting for approximately 35 to 45% of all traffic passing through the straight on its own.

And according to Lloyd’s list data, the number of China linked ships that were able to pass through the straight between March 1st and 15th was only 11.

Most of these were dry cargo ships.

Mainstream Chinese tankers are still not using the route.

So on average, 250 Chinese ships are currently stranded in the Straight of Hormuz.

State-owned giant Costco has suspended all new bookings to the Middle East.

And on March 12th, shrapnel struck a Chinese ship attempting to pass through after it issued a China owner signal.

Iran couldn’t even protect its own allies ship.

At this very point, China’s patience ran out.

On March 12th, Mojaba Kame threatened the straight of Hormuz will remain closed.

We will open new fronts.

And this threat was not just empty words.

Iran launched missile and drone attacks against Bahrain, Kuwait, Oman, Saudi Arabia, and the UAE.

Muchaba’s strategy is clear.

If I go down, I’ll take the region down with me.

Mutual destruction.

However, this mindset crossed the red line of Iran’s biggest ally.

China’s foreign ministry issued a stern warning to Iran and explicitly rejected the Gulf attacks.

Wang Yi was on the phone with Gulf leaders at the same time.

effectively siding against Iran.

At the UN Security Council, China refused to defend Iran.

It did not use its veto, but abstained.

It left Iran in the lurch.

>> China does not agree with the attacks on Gulf States and condemns all indiscriminate attacks on civilians and non-military targets.

>> What did China do while Iran was being bombed?

Nothing.

The capital was struck.

Silence.

The leader was killed.

Silence.

The navy was sunk.

silence.

It watched from the sidelines while its ally burned.

But the moment Iranian missiles were aimed at the Gulf, at the arteries through which China’s oil flows, Beijing’s unwavering friendship turned to betrayal overnight.

To understand China’s anger toward Iran, we must first examine Beijing’s calculations.

The Strait of Hormuz is the lifeline of China’s energy security and thus the survival guarantee of its massive industrial machine.

Between 35% and 50% of China’s total crude oil supply passes through this 30-m long straight.

Let’s put this into perspective.

China alone accounts for 37.7% of all oil passing through the straight.

It is by far the world’s largest customer of Hormuz Oil, leaving India and Japan far behind.

But the issue isn’t just about barrels.

It’s about massive capital and strategic depth.

Saudi Arabia, the United Arab Emirates, Kuwait.

For China, the Gulf countries represent not just oil, but billions of dollars in investment and market opportunities.

42% of China’s crude oil imports come directly from these countries.

Trade volume with the UAE alone has exceeded $90 billion.

China has massive interests in these countries ports, autonomous systems, and telecommunications infrastructure.

The Gulf is one of the key focal points of China’s Belt and Road Initiative.

At the Khalifa port in the UAE, there is a terminal investment by the Chinese company Costco.

In Saudi Arabia, there is a technology partnership for the Neon project.

Major Chinese companies are operating in oil fields in Iraq.

The total value of these investments amounts to hundreds of billions of dollars.

Every missile Iran fires at the Gulf hits China’s coffers.

This is the true source of Beijing’s anger.

As long as the straight of Hormuz remains closed, the pressure on the Chinese economy is mounting exponentially.

In the short term, China is relatively comfortable.

It holds a strategic oil reserve of 1.39 billion barrels.

This reserve covers approximately 120 days of consumption.

In addition, there are millions of barrels of floating stock waiting at sea.

Beijing has already protected the domestic market by banning refined fuel exports.

Teapot refineries can continue operating for a while longer before their stocks run out.

But after 3 months, this buffer will run out and what follows will be a disaster.

Oil prices could skyrocket to the $100 to $150 range and inflation could explode.

Logistics costs could double.

China’s export-dependent economy could hit the brakes hard.

Factories might not be able to find fuel.

Container costs could hit the roof and supply chains could break.

Hundreds of small independent refineries concentrated in China’s Shandong province and kept afloat by cheap sanctioned Iranian oil could go bankrupt.

These refineries account for roughly a quarter of China’s total refining capacity.

If Iranian oil stops flowing and they are forced to pay full price on the global market, their margins will drop below zero and the collapse of these refineries would mean not just an energy crisis but an employment crisis.

The broader economic picture is also bleak.

China’s GDP growth had already fallen below 5%.

An energy shock would drag it even lower.

Beijing’s calls for an immediate ceasefire and dialogue are not driven by a love of peace.

It is the fear of this looming economic crisis.

China does not want to save Iran.

It wants to save its own economy.

And when forced to choose between the two, it would sacrifice Iran without a second thought.

With the straight closed, China is turning to urgent alternatives to keep its industry afloat.

The first option is the pipelines bypassing Hormuz operated by Saudi Arabia and the UAE.

As we analyzed in detail earlier, Saudi Arabia’s Petroline pipeline to the Red Sea has been expanded to 7 million barrels per day.

The UAE’s Fujira pipeline carries 1.5 to 1.8 million barrels.

These pipelines secure a portion of the oil reaching China, but not all of it.

And the Red Sea route is under threat from the Houthis.

The second option is oil and gas transported via pipelines from Kazakhstan and Turk Menistan.

But the capacity of these pipelines is limited and cannot be rapidly increased.

Infrastructure investment takes years.

The third option is to bring gasoline by tanker from Nigeria, Angola and Brazil.

But these routes are long, costly and cannot match the volume coming through the straight of Hormuz.

A tanker taking the Cape of Good Hope route spends 15 to 20 days longer at sea compared to the straight of Hormuz route.

This is a full-blown logistical nightmare.

The fourth option is LNG substitution.

Qatar’s massive LNG exports passed through the straight of Hormuz and those have also stopped.

China’s LNG imports had surged in recent years.

Australia and the US could be alternative LNG sources, but purchasing LNG from the US conflicts with efforts to align with Iran, a country the US is currently at war with.

Every energy option carries a diplomatic cost.

As China works to secure its energy supply, it is colliding with its own geopolitical contradictions.

And the fifth option is the most troubling.

Russia.

Russia was already China’s fastest growing oil supplier.

The ESPO pipeline and the power of Siberia natural gas pipeline formed the backbone of the China Russia energy axis.

But the straight of Hormuz crisis has taken this relationship to an entirely new level.

The equation is simple.

As long as the straight of Hormuz remains closed, it becomes difficult for China to import oil from the Gulf.

All alternatives are either insufficient, expensive, or a diplomatic minefield.

And Russia is the only major producer pumping oil directly to China via a pipeline.

This means China has become completely dependent on Russia for its energy security.

And Putin will exploit this dependency to the fullest.

Russia will sell more oil to Asia in increasing volumes.

Moreover, by conducting these transactions in rubles and renmb instead of dollars, it will circumvent western sanctions.

This is not just about energy trade.

It’s a transformation of the global financial system.

Every China Russia oil deal chips away at the dollar’s dominance.

Rising oil prices are already boosting Russian revenues.

It can provide a massive cash flow to finance the war in Ukraine.

Here lies the irony of the Venezuela, Russia, and Iran energy encirclement we analyzed earlier.

The US was systematically squeezing China’s three major alternative energy sources.

The Venezuela front closed in January.

Iran is under blockade, but China cannot afford to lose Russia, and Putin knows this.

The Hormuz crisis has doubled Russia’s leverage over China.

The closure of Hormuz is choking not just China, but the entire Asian economy.

This is particularly devastating for Japan.

Having scaled back its nuclear energy capacity after Fukushima, Japan had shifted a large portion of its energy needs to LNG and oil, both of which passed through the straight of Hormuz.

South Korea’s semiconductor production is an incredibly energyintensive sector.

If oil and gas supplies are cut off, Samsung and SKH’s factories will slow down or shut down.

This would mean the collapse not only of Asia’s but also of the global technology supply chain.

Let’s pause here because this chip crisis is Putin’s worst nightmare.

Where does the brain of the ballistic missiles, tanks, and drones that Russia has launched at Ukraine come from?

Moscow is keeping its war machine running by circumventing sanctions and smuggling microchips from Asia, specifically those made in South Korea and Taiwan into the country via the black market.

When Iran closes the straight of Hormuz, production of those chips in South Korea stops.

When chip production stops, Russia’s military supply chain is paralyzed.

In other words, Putin’s ally, Iran, is sabotaging not only Asia, but also indirectly the Russian military’s weapons production lines.

What about the other major buyer, India?

India acted pragmatically by securing transit permits through bilateral agreements with Iran.

Two Indian tankers passed through the strait, but these individual solutions do not resolve the systemic problem.

22 Indian ships are still awaiting approval from Iran.

Is it just Asia?

Even though Europe has only a small physical share of about 5%, it will face a massive wave of inflation from the resulting price shock.

Oil is a global commodity.

Even if you don’t buy a single barrel from the straight of Hormuz, you can’t escape the price hike.

Europe is already under the double pressure of the Iran conflict and the Ukraine crisis.

If an energy shock is added to this, stagflation becomes inevitable.

Now we come to the most critical question.

Who stands to gain from this crisis.

The least affected are the US which produces its own oil.

The US imports only 2.5% of the oil passing through the straight of Hormuz.

Russia doesn’t import any oil from there.

On the contrary, it exports it.

As prices rise, it profits.

This asymmetry is shaping the geopolitical map of the crisis.

The US and Russia are the least affected and even the beneficiaries of this crisis.

China, Japan, South Korea and India are the most affected and Iran is the party shooting itself in the foot.

On the other hand, the phone diplomacy currently being conducted by Chinese Foreign Minister Wang Yi is not a show of strength.

It is a desperate search for balance.

Beijing’s dilemma is this.

It wants to keep both Iran and the Gulf.

It used to get cheap sanctioned oil from Iran.

That door has closed.

It used to import millions of barrels a day from the Gulf.

That door has also been blocked.

It doesn’t want to lose Iran because it will need a cheap oil source again once the war ends.

It doesn’t want to anger the Gulf States because it currently depends on their oil to survive.

But the nature of the war does not allow for a win-win doctrine.

As Iran sets the region ablaze with a suicidal mindset, the strategy of getting along with both sides has collapsed.

The image of a neutral and reliable partner that China has meticulously built in the Middle East over decades has been shattered.

This image was China’s greatest asset in the region.

The stance of we only do business, we don’t meddle in your internal affairs, which stood in contrast to US military interventions.

But now China is forced to choose a side and the side it has chosen is clear.

Money, oil, the Gulf.

Its abstension in the UN Security Council vote is the diplomatic confirmation of this.

China did not condemn Iran, but it also refused to defend it.

It did not use its veto.

It left Iran alone.

This is the softest form of betrayal Beijing could commit.

But it is still betrayal.

And Iran knows this.

Iran is trying to keep China at the table through blackmail.

But China’s response is clear.

We won’t support you at the expense of our own economy.

There are no permanent friendships on the geopolitical stage, only permanent interests.

The Iran crisis is a stark example of this ruthless rule today.

As the Tehran regime held out under missile attacks, it failed to find the shield it expected from China, which it had regarded as an ally.

Yet when that same Iran threatened oil facilities in the Gulf and the Straight of Hormuz with suicidal reflexes, it found an angry Beijing standing against it.

That narrow waterway just 30 mi wide does not merely determine Asia’s energy fate.

That straight is a massive litmus test revealing which hands states will let go of and toward whom they will turn during rational moments of crisis.

As Iran set the region ablaze, China chose the survival of its own factories.

Moscow, meanwhile, is emerging from this diplomatic shutdown by filling its war chest.

Today’s events are a painful testament to just how fragile the threads binding the global economy and alliances truly are.

So, what are your thoughts on this matter?

Please share your thoughts in the comments.

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