China’s trade with Iran, Gulf states plunges as Strait of Hormuz crisis hits energy flows

China’s trade with Iran and Gulf countries fell sharply in March as restrictions on the Strait of Hormuz tightened amid the US-Israeli war on Iran.

Newly released data by Chinese customs showed imports from Iran plunged 48 per cent year on year last month, while exports to the country dropped 90 per cent.

Across the broader Middle East, exports to eight Persian Gulf economies – including Saudi Arabia and Qatar – fell by 57 per cent, while imports declined by nearly 33 per cent.

The disruption stems largely from the effective closure of the Strait of Hormuz – a narrow waterway that handles about 20 per cent of global oil. This curtailed crude flows, contributing to a 25 per cent year-on-year drop in China’s oil imports from Gulf countries in March.

The latest data followed Tehran briefly reopening the strait before reversing course within a day, as Washington maintained a naval blockade on Iranian ships and US President Donald Trump warned Iran not to “hold the US hostage”.

“The Strait of Hormuz has long been recognised as a global chokepoint, but it was not until this conflict that we realised how vulnerable it really is,” said Alfredo Montufar-Helu, managing director at Ankura China Advisors.

04:04

How US-Israeli strikes on Iran are sending shock waves through global energy markets

“The strait is no longer just a significant transit route for global energy markets, it is now a permanent geopolitical lever,” he said, adding that even a ceasefire was unlikely to remove the security premium in energy and maritime insurance costs amid continued risks.

Rising supply pressures could increase calls for a resolution, he said, but cautioned that a fundamental breakthrough in US-Iran negotiations would be required. “Unfortunately, there is currently no evidence that such a breakthrough is on the horizon,” he added.

South China Morning Post