International oil prices surge by 7% straight up, passage through the Strait of Hormuz plummets by 90%, a global oil crisis may be imminent

Reporter | Feixin Yi, Cao Enhui

Editor | Cao Enhui, Jiang Peixia, Luo Yifan

In March 2026, the Strait of Hormuz—once bustling with ultra-large oil tankers weaving back and forth—had to unmoor and stand by. Behind the more than 90% plunge in shipping volume, a new round of global oil crisis is taking shape.

An emergency report released by the International Energy Agency (IEA) that month shows that the global oil market is facing the most severe supply bottleneck in history. Gulf oil-producing countries are cutting production in unison, pushing Brent crude prices to a new high in nearly two years.

As of 15:52, Brent crude was up 7.0% intraday, to $108.32 per barrel; WTI crude was up 6.41% intraday, to $106.54 per barrel.

A “second solution” for global energy is taking shape

Institutions predict that if this crisis continues for half a year, its impact would be comparable to the first oil crisis in 1973. At that time, the Fourth Middle East War broke out. Arab oil-producing countries imposed an oil embargo on the United States and these Israel-supporting countries, causing oil prices to surge from $2.7 per barrel to $13 per barrel within just a few months. This directly plunged the United States into the worst postwar stagflation, and global stock markets also crashed in response.

But unlike half a century ago, when Western economies fell back into energy panic due to Middle East geopolitical turmoil, China’s energy supply chain has demonstrated rare resilience.

At present, the energy solutions of major global economies, including China, are dominated by fossil energy. After decades of building energy security systems, China has already deeply participated in the reshaping of the global energy order—China-centered global energy’s “second solution” is taking shape.

China’s energy supply is highly resilient

The resilience of China’s energy supply comes from a “three-in-one” energy security system: oil and gas pipeline infrastructure as the “skeleton,” power equipment manufacturing as the “muscle,” and the energy supply chain as the “nerves.”

According to data released by the National Energy Administration, in 2025, China’s total production of primary energy first exceeded the 5-billion-ton mark to reach 5.13 billion tons of standard coal. Of this, crude oil output was 216 million tons, up 1.5% year on year; natural gas production was 262.06 billion cubic meters, with production increasing by more than 100 billion cubic meters for 9 consecutive years; the total length of the oil and gas pipeline network exceeded 200,000 kilometers; gas storage capacity reached 54 billion cubic meters; and the annual primary pipeline transportation capacity for natural gas exceeded 400 billion cubic meters per year.

In particular, oil and gas pipeline facilities have become the key to responding to extreme disruptions. For example, in January 2026, when multiple regions in China experienced severe cold-wave weather and natural gas supply assurance entered a critical stage, the national trunk natural gas pipeline network managed by the State Pipeline Network achieved a daily gas delivery volume of 1.1 billion cubic meters, setting a new historical record for the daily gas supply peak.

Independent and controllable power equipment manufacturing is another major core support. Currently, China’s global competitiveness in the power energy equipment manufacturing industry has already formed advantages in multiple areas. China’s global market share of power grid equipment is about 35%-40%, making it the world’s largest production and export base. Among ultra-high-voltage equipment, the global market share exceeds 70%; the localization rate of core equipment exceeds 95%; and transformer exports account for 35% of the global total. This means that in long-distance, high-capacity power transmission, China holds absolute authority in terms of voice and influence.

In wind power, photovoltaics, and nuclear power equipment, Chinese manufacturing shines even more. Among the top ten global wind turbine complete-equipment manufacturers, Chinese companies occupy 6 seats. China’s photovoltaic power has the world’s largest installed capacity of power stations, contributing more than 80% of global manufacturing capacity. China’s nuclear power installed capacity ranks first globally, with key main equipment for nuclear power achieving 100% domestic localization.

A highly resilient energy supply chain ties together the “nerves” that ensure steady operation of China’s energy system. In particular, cross-regional energy mutual support enables energy supply security to be more efficient. By the end of the “14th Five-Year Plan,” China had built 14 direct-current transmission corridors for delivering electricity externally, including 10 ultra-high-voltage direct current (UHV DC) lines, with an external transmission scale reaching 95.31 million kilowatts. The latest data shows that in 2025, the Northwest Power Grid’s cross-regional external transmission electricity reached 411 billion kWh, breaking through 400 billion kWh for the first time.

Amid a volatile global energy market, China’s energy import structure is also undergoing profound changes, shifting toward “global deployment with land and sea operating together.”

Customs data from the General Administration of Customs confirms this. In 2025, China’s total crude oil import volume reached 578 million tons, sourced from 49 countries. The share of imports from the Middle East fell to 42.3%, down 10 percentage points compared with ten years ago.

The diversification of natural gas imports is even more pronounced. According to data from the National Energy Administration, in 2025, China’s natural gas import sources covered more than 20 countries. Import volume was 176.46 billion cubic meters, down 2.8% year on year. LNG (liquefied natural gas) imports decreased by 10.6% year on year. China’s external dependence on natural gas was 40%, at the lowest level during the “14th Five-Year Plan.”

It is worth noting that, with the support of the China-Russia East Line natural gas pipeline, the China-Myanmar oil and gas pipeline, and the Central Asia natural gas pipeline, last year the share of pipeline gas imports in China rose to about 49%. This “land and sea operating together” structure allows China to still obtain stable supplies when traditional chokepoints such as the Strait of Malacca and the Strait of Hormuz are blocked, through land pipelines.

It is undeniable that building cross-border energy corridors is the physical support for diversified layouts. Taking the China-Russia East Line natural gas pipeline as an example, last year the pipeline transported 38 billion cubic meters of gas, accounting for 47% of pipeline gas imports. This volume is enough to meet the residents’ annual gas demand of China’s three northeastern provinces.

Renewable energy generation has nearly reached 40%

While ensuring energy security, China is also accelerating the construction of a new-type energy system and gradually becoming a leader in the global energy transition.

In 2025, China’s total electricity consumption across society first exceeded 10 trillion kWh, setting a global historical record. Viewed horizontally, this figure is more than double the United States’ annual electricity consumption, and exceeds the combined total electricity consumption of the European Union, Russia, India, and Japan for the year.

However, within this massive demand, nearly 4 kWh out of every 10 kWh comes from renewable energy. According to data from the National Energy Administration, in 2025, nationwide renewable energy power generation reached 3.99 trillion kWh, up 15% year on year. It accounted for about 38% of total electricity generation, exceeding the combined electricity consumption of the tertiary industry (199.42 billion kWh) and urban and rural residents’ living electricity (158.80 billion kWh) in the same period.

Behind the above share is China’s long-term investment in renewable energy. In 2025, China’s renewable energy installed capacity hit a new high again, with a share exceeding 60%. New installed capacity added in wind power and solar power exceeded 430 million kW. The cumulative installed capacity’s share is approaching one-half, surpassing thermal power for the first time in history. And by the end of 2025, China’s combined wind and solar installed capacity reached 1.84 billion kW, accounting for 47%.

Currently, a wave of green power transition is sweeping across the globe. For example, the European Union statistics office (Eurostat) report points out that in 2025, the share of renewable energy power generation in the EU’s total power generation reached 47.3%, a slight increase compared with 2024. However, it should be noted that the EU’s growth in green power relies on wind power and photovoltaics. As wind and solar penetration rates rise rapidly, the power grid finds it difficult to fully absorb their fluctuating output, and curtailment of wind and solar becomes more serious.

By comparison, China’s growth in green power is a comprehensive increase across wind power, solar power, hydropower, and biomass power, with a more balanced structure. Moreover, during the “15th Five-Year Plan” period, under the national strategic guidance of “building a strong energy nation,” China has entered a critical period for accelerating the development of a new-type energy system.

In addition, a reporter from 21st Century Business Herald noted that this year’s Government Work Report proposed focusing on building a new-type power system, accelerating the construction of smart grids, developing new energy storage, and expanding the application of green electricity.

At the 11th China Energy Development and Innovation Conference recently held, Shi Yubo, chairman of the China Energy Research Society, said that, based on development patterns, after per capita GDP crosses $10,000, energy consumption will enter a prolonged period of rigid growth. From the perspective of real challenges, China must both guarantee the energy demand needed for sustained and sound socio-economic development and steadily achieve the “dual carbon” goals. Under the dual constraints, it is crucial to build a solid energy security firewall. Energy is the “driving blood” of development, and also the country’s “lifeline for security.”

The “electrification” revolution in end-use consumption has begun

With low-carbon transformation on the power generation side in full swing, electrification of end-use consumption is also a key step toward reducing dependence on fossil fuels.

A set of data clearly demonstrates China’s “footprint.” Data released by the China Association of Automobile Manufacturers shows that in 2025, China’s production and sales of new energy vehicles completed 16.626 million and 16.49 million units respectively, ranking first in the world for the 11th consecutive year.

Meanwhile, export data further reflects China’s global competitiveness in new energy vehicles. In 2025, China exported 2.615 million new energy vehicles, up 103.7% year on year, maintaining the number one position globally for three consecutive years.

According to foreign media reports cited by People’s Daily Overseas Network, the rapid R&D cycle and advanced design philosophy have continuously improved the global competitiveness of China’s electric vehicles, making them a benchmark in the industry. “China is vigorously promoting the development of the electric vehicle industry, enabling automakers’ R&D cycles to be effectively shortened—often requiring only one or two years to launch a brand-new model. In addition, patents in China’s electric vehicle industry are increasing continuously, and its technological level has improved significantly.”

What cannot be ignored is that the explosive growth of China’s new energy vehicle industry is inseparable from the rise of the power battery industry. According to data released recently by South Korean market analysis organization SNE Research, in 2025 the global power battery market size first surpassed the 1,100 GWh mark. Among them, Chinese companies have absolute dominance in the global automotive power battery market; their combined market share further increased to 70.4% in 2025, with CATL and BYD ranking as the top two.

In fact, the real value of the electrification “revolution” is best reflected in the substitution at the end-use level. By 2025, China’s stock of new energy vehicles exceeded 43 million. Every year, it can save about 85 million tons of crude oil, equivalent to reducing overseas oil dependence by roughly 15%.

It should be pointed out that the large-scale production and sales of new energy vehicles also mean a substantial consumption volume of power batteries. In response, China has already formed a recycling closed loop of “resources—production—consumption—recycling” for power batteries. Data released by the Ministry of Industry and Information Technology shows that in 2025, China’s comprehensive utilization volume of waste power batteries from new energy vehicles exceeded 400,000 tons, up 32.9% year on year. The recovery rates of key metals such as lithium, cobalt, and nickel by backbone enterprises are at internationally advanced levels.

The International Energy Agency (IEA) states in its World Energy Outlook 2025 report that the global energy system is undergoing the deepest structural adjustment in two decades. The combination of geopolitical tensions, frequent extreme climate events, and accelerated technological changes is rebalancing the weight between energy security and energy transition.

The report also specifically proposes: “China’s energy consumption structure is stabilizing, with its role shifting from a center of demand to a center for technology and capital output.”

After decades of exploration and efforts, China is forming a “second solution” for global energy. Advancing both energy security and energy transition side by side, it does not rely on changes in international geopolitics.

What do you think the future direction of international oil prices will be?

(Disclaimer: The content of this article is for reference only and does not constitute investment advice. Investors act on it at their own risk.)

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