China has presented itself as a neutral geopolitical actor in the Middle East. A deal was brokered in March to help Iran and Saudi Arabia restore relations. And in the days since Hamas attacked Israel from Gaza, China has tried to keep its distance, with a government spokesman calling the country “a mutual friend of Israel and Palestine.”
Still, there is much at stake for China in the Middle East, especially if the war currently being waged in Israel and Gaza were to spread to the region.
One important reason: oil.
No country buys oil anymore from Saudi Arabia, the world’s second-largest producer after the United States. Half of China’s oil imports and just over a third of all oil burned in China come from the Persian Gulf, according to Andon Pavlov, senior refining and oil products analyst at Kpler, an analytics firm in Vienna.
China has also started buying more oil from Iran, a long-time supporter of Hamas, the group behind the attack. China has more than tripled its imports of Iranian oil in the past two years and bought 87 percent of Iran’s oil exports last month, according to Kpler, a company that specializes in tracking Iran’s oil exports.
China “is highly exposed to the current instability in the Middle East, particularly as it escalates,” said Philip Andrews-Speed, a longtime specialist on China’s oil policy at the National University of Singapore.
China, the world’s second-largest economy, has become addicted to foreign oil at a breathtaking pace. In the early 1990s, China was still self-sufficient in oil supplies. The country currently relies on imports for around 72 percent of its oil needs.
By comparison, the United States’ dependence on imported oil peaked at about 60 percent around 2005, before the fracking boom turned the United States into a net exporter.
Xi Jinping, China’s supreme leader, has maintained energy security as one of the country’s top priorities during his decade in power.
“Energy supply and security is crucial to national development and people’s livelihood, and is an extremely important matter for the country that cannot be ignored at any time,” Mr. Xi said in July.
To this end, China has made huge investments in electric vehicles. It now dominates global production of electric cars, and in August a third of cars sold in China were electric, said Bill Russo, a Shanghai-based automotive consultant.
However, gasoline consumption remains high as new car sales gradually change the overall fleet of primarily gasoline-powered vehicles on China’s roads. Driving has also increased sharply this year, including during a week-long national holiday this month, as China ended nearly three years of “zero Covid measures” that restricted travel.
Another reason for China’s thirst for oil: It is the world leader in the production of petrochemicals, which are made from crude oil and natural gas.
China has little chance of shedding its dependence on oil imports, said Lin Boqiang, dean of energy studies at Xiamen University in Xiamen, China. “Looking forward, I don’t think it can go down significantly,” he said.
China does not officially admit to buying oil from Iran, which is under sweeping international sanctions over its attempts to build nuclear weapons. But his purchases have been well documented by industry experts.
Iran relies on transporting oil aboard tankers that sometimes turn off their automatic tracking transponders for weeks and often only turn them back on when they reach busy waterways such as the Strait of Malacca next to Malaysia.
China’s official statistics instead show that Malaysia is one of China’s largest oil suppliers, despite Malaysia having limited and shrinking oil production from aging oil fields.
Refineries in China that convert crude oil into gasoline and other products have shifted to buying more oil from Iran because Iranian oil is now cheaper than Russian oil, Pavlov said. Iranian oil is sold at a discount to world market prices of about $10 a barrel despite sanctions, while Russian oil is sold at a discount of about $5 a barrel despite sanctions, he said.
“China always chooses the cheapest,” he said.
Although Russia has a long border with China, infrastructure limits Russia’s ability to transport more oil to the south.
Officials from Russia, China and Mongolia have held a long series of discussions over the past year over whether to build a natural gas pipeline called Power of Siberia 2 that would connect Russian gas fields in Mongolia with China. The construction of such a pipeline could allow oil to be transported along the pipeline.
Russian President Vladimir V. Putin has said he will attend Mr. Xi’s Belt and Road Forum in Beijing next week, renewing speculation in the global energy industry about whether a pipeline deal could finally be struck has ignited. However, building a pipeline would take many years and cost tens of billions of dollars.
“I am extremely skeptical of the commercial logic of the pipeline, but energy security and geopolitics could ultimately trump economics,” said Joe Webster, a senior fellow at the Global Energy Center at the Atlantic Council, a Washington research group.
Some of the oil China buys is stored in storage tanks that the country is building even faster than its oil consumption has increased. China does not publish figures on its reserves, but they are believed to be significant. Most experts estimate that China’s oil reserves account for about 90 days of imports, which has long been the minimum set by the United States for its strategic petroleum reserves.
Energy security is not the only factor in China’s decision-making on Middle East issues, said Bonnie Glaser, director of the Indo-Pacific program at the German Marshall Fund of the United States, a policy research group in Washington.
Beijing has tried hard to maintain friendly relations with the Islamic world even as China cracks down on predominantly Muslim minorities in its far western region of Xinjiang. China has also sought to maintain ties with both Israel and the Palestinians.
“The only way China could achieve this goal is by not interfering too much,” Ms. Glaser said.
But whether China can maintain its distance from the problems in the Middle East is less clear.
“With America not importing much oil from this part of the world, countries in this part of the world are starting to think about how their geopolitical alliances will be reshaped in the coming decades,” said Kevin Tu, a Beijing-based energy consultant. “China has become a major stakeholder in this region, whether it likes it or not, and China has a role to play in stabilizing the region in the coming years.”
Li You contributed to the research.