Hormuz disruption: why China’s gas trap is a regional warning

Tensions between the U.S. and Iran and the resulting loss of most shipping through the Strait of Hormuz, even as a fragile ceasefire put in place on April 8^th plays out, continues to shape energy markets. Major economies are also being impacted by a simultaneous loss of oil and LNG cargoes through the geopolitically volatile chokepoint.

China, the world’s largest energy consumer, is no exception. The country remains heavily exposed to Middle Eastern energy flows, importing roughly half of its crude oil and about one-third of its LNG via the Strait of Hormuz. A S&P Global report said that China relies on the region for about 33% of its LNG supply, mostly shipped from Qatar via long-term contracts indexed to the price of Brent crude oil, the global oil pricing benchmark.

Compounding the disruption, QatarEnergy declared force majeure on parts of its long-term contracts with China, South Korea, Italy, and Belgium following Iranian missile strikes on Ras Laffan (Trains 4 and 6) on March 18th. The attacks knocked out 17% of Qatar’s total export capacity (12.8 mtpa). Repairs are estimated to take three to five years, according to media reports.

Global energy markets were already under strain after U.S. and Israeli strikes on Iran beginning on February 28th. The additional loss of Qatari supply has only deepened the disruption.

Not surprisingly, Asian spot LNG prices surged to multi-month highs, nearly doubling last month, triggering immediate demand destruction. The result has been a quick pivot back to coal for industrial users, not only in China but throughout the region.

The consequences are clear: elevated carbon emissions from coal-fired power plants threaten to derail national climate targets. There is an ever-increasing chance that countries in the region will either miss decarbonisation goals entirely or be forced to revise them under pressure, neither of which is an acceptable scenario.

Loss of LNG

In China, natural gas accounts for roughly 8–9% of its total primary energy consumption, with LNG imports making up about 30% of that gas supply. Moreover, China also uses LNG for industrial processes, city heating and cooking, as well as a cleaner fuel for heavy-duty transportation (trucking), according to an Institute for Energy Economics and Financial Analysis (IEEFA) assessment.

Meanwhile, China leads the world in LNG usage for trucks, with the number of trucks using the fuel in the country almost tripling since 2020, according to a Shell report. As of 2025, China had an estimated 1 million LNG-fuelled heavy-duty trucks in operation, with more scheduled to come online.

LNG can help reduce carbon emissions compared with oil-based fuels, as well as emissions of fine particulate matter and nitrogen oxides – two pollutants linked to smog and respiratory illness. On the other hand, to deliver the full greenhouse benefits of LNG, methane emissions have to be minimised. The loss of LNG, therefore, compromises the country’s transportation system.

While LNG-fuelled trucks run on natural gas, they aren’t easily interchangeable with other gas formats. LNG is stored at cryogenic temperatures as a liquid and requires specialised insulated fuel tanks, meaning they can’t directly fill up with Compressed Natural Gas (CNG) without adaptation.

That adaptation takes both time and money. In the interval, not only could these trucks be stranded, but they could be replaced with additional internal combustion engine (ICE) vehicles that run on gasoline or diesel. This would have a knock-on effect on the environment since LNG has increasingly been used to offset carbon emissions in the transportation sector.

Yet the issue isn’t whether China has failed to prioritise renewables; it’s clearly pushed a greener agenda. The country leads the world in renewable capacity and continues to expand aggressively.

China’s renewable energy capacity continues to expand at a staggering rate, maintaining a 3:1 ratio over the U.S. in installed capacity, according to International Energy Agency (IEA) data. However, the sheer scale of this buildout has yet to decouple the region’s industrial heartlands from their structural dependence on seaborne LNG.

The real question, therefore, is whether even this scale of buildout can offset the structural realities of China’s energy system. So far, the answer appears to be no, with China remaining tied to global fuel markets despite its diversification efforts.

While Beijing has been lauded for its world-leading renewable capacity, the current crisis reveals a stark reality: green energy alone can’t yet plug the holes left by a maritime blockade. Despite the aggressive build-out of wind and solar, these intermittent sources remain largely decoupled from the specialised industrial and transport sectors that depend on the physical properties of gas.

China’s inability to effectively hedge against a seaborne disruption by relying on LNG for its heavy-duty trucking and high-heat industrial processes has left it exposed. The cryogenic infrastructure required for LNG trucks can’t be swapped for electric batteries overnight, leaving a critical part of the logistics chain stranded. By continuing to sign long-term LNG contracts rather than accelerating the electrification of heavy industry, China has tethered its economic stability to the volatility of the Middle East.

Ultimately, the Strait of Hormuz disruption proves that for all its green rhetoric, China remains reliant on fossil fuel imports. The energy fortress that Beijing attempted to build has a significant structural flaw. Simply put, it’s still powered by a global supply chain under increasing geopolitical strain. Until the country can move beyond its dependence on seaborne molecules, its energy security will remain at the mercy of geopolitical flashpoints.

Regional contagion

The volatility is not just a Chinese problem, however, but a growing regional contagion.

“The uncertainty lies in the timing of the price pass-through for these major economies,” London-based independent LNG analyst Andy Flower told Gas Outlook. He notes that while JKM spot prices were stable at $10/MMBtu in February, they have already surged to over $20/MMBtu as of late March.

“With Qatar potentially taking months to restart its 14 liquefaction trains even after the conflict ends, China is essentially in a direct bidding war with neighbours like Thailand and Singapore for the very few non-Hormuz cargoes available from new projects like Golden Pass [in the U.S.] or LNG Canada,” he added.

For a nation that leads the world in renewables but remains physically tethered to gas for its heavy transport and industrial base, this bidding war represents a strategic vulnerability that no amount of solar or wind capacity can immediately offset.

(Writing by Tim Daiss; editing by Sophie Davies)