Lin Boqiang: U.S.-Iran Conflict Impact on Global Energy Market Far Exceeds Russia-Ukraine War; China Holds Four Strategic Cards

Text | Zhang Mengjie

Editor | Zheng Kejun

Since the beginning of this week, we have witnessed a frantic 24 hours in the oil market, with global investors holding their breath.

On Monday, Brent crude oil prices soared to $119 per barrel, then plummeted to $84, marking the largest intraday fluctuation on record in dollar terms.

The epicenter of the storm points to a narrow maritime passage—the Strait of Hormuz. How will the US-Iran conflict impact the global energy market? What does it mean for China? When will the crisis be resolved? Lin Boqiang, Chair Professor at Xiamen University School of Management and Director of the China Energy Policy Research Institute, shared his exclusive analysis on Tencent Finance’s “Insight into the Stock Market” program.

Lin Boqiang believes that the core of this crisis is the “passage risk” of the Strait of Hormuz, with potential destructive power far exceeding that of the Russia-Ukraine conflict. He outlined three scenarios: if the Strait is blocked for less than 10 days, the impact will be limited and markets can absorb it; if about three months, some countries can still maintain “continuous oil supply” by releasing strategic reserves; but if the blockade lasts six months, a supply cutoff could severely damage the global economy.

China’s relative “resilience” in this storm confirms the forward-looking nature of the “New Energy + Strategic Reserves” strategy, with energy storage becoming a key factor in the success or failure of future energy transformation.

01

As long as the war continues
The “roller coaster” of international oil prices will recur

Oil prices fluctuate more than 30% within 24 hours—how does this compare historically? “Extremely rare,” Lin Boqiang states.

He recalls that during the 2008 financial crisis, demand shocks affected the energy market in a predictable way—demand shrank, and prices naturally fell back. But the situation with the Strait of Hormuz blockade and Middle East wars is different, impacting both supply and demand: when the war ends and the blockade is lifted, no one can give a precise answer.

Therefore, this volatility is unlike previous events; any disturbance triggers immediate chain reactions in the market.

Additionally, the oil futures market is filled with speculative funds, which are inherently driven by sentiment. Panic and greed alternate, amplifying price swings.

“As long as the war doesn’t stop, we will often see ‘roller coaster’ prices like this week,” Lin Boqiang says.

02

From “Production Cuts” to “Supply Breaks”
Why is this crisis more dangerous than Russia-Ukraine?

“US-Iran conflict and Russia-Ukraine conflict are fundamentally different,” Lin Boqiang explains. The Russia-Ukraine conflict impacts the “upstream”—Russia, as an oil-producing country, is under sanctions, but its oil still reaches markets through various channels (like “shadow fleets”). Essentially, it’s a “production reduction,” not a “supply cutoff.”

In contrast, the key issue in the US-Iran conflict is not a single oil-producing country but a vital global energy “lifeline”—the Strait of Hormuz. Although Iran’s oil exports account for only about 4% of the global total, the strait it controls handles 20% to 30% of global oil shipping.

“It’s like blocking traffic. The impact of a blocked passage is much greater than sanctions or war against a single country,” Lin emphasizes. This blockade does not just “reduce supply” but directly severs the main artery connecting the global energy upstream and downstream. Importers cannot get in, exporters cannot get out, and with limited reserves, some producers may be forced to halt production.

This “stuck” feeling is the core reason for the market’s extreme volatility.

The severity of the crisis depends entirely on how long the Strait remains blocked. Lin provides a “time scale”:

• Within 10 days: Limited impact, markets can absorb the shock;
• About 3 months: Some countries can still maintain “continuous oil supply” by releasing strategic reserves, others face “supply cuts”;
• Six months or more: A supply cutoff would be catastrophic, severely damaging the global economy.

For Asia-Pacific markets, Lin believes China, Japan, and others hold over 100 days of strategic oil reserves, ensuring short-term supply. But a prolonged blockade of the Strait of Hormuz would push oil prices to dizzying heights, triggering global inflation and recession—an unbearable burden for any country.

“Actually, Trump is more worried than we are about oil prices reaching $200,” Lin says. Despite the US being a major oil producer and net exporter, oil prices are set globally, directly affecting inflation, which in turn influences elections—a political reality the White House cannot ignore.

03

Overlooked Crisis
The impact of natural gas could be greater than oil

While markets focus on crude oil, Lin Boqiang highlights an often-overlooked risk: natural gas.

“If the Strait of Hormuz is blocked for too long, upstream oil producers will be forced to halt production. Restarting oil is relatively easier, but liquefied natural gas (LNG) is much harder to resume quickly,” he warns.

Data shows that about 20% of global LNG must pass through the Strait of Hormuz, mostly from Qatar—alone, Qatar accounts for nearly 20% of global LNG exports. LNG is more difficult to transport and more concentrated in production; once halted, restarting takes much longer than oil.

Currently, the blockade has entered its tenth day. According to a Morgan Stanley report on March 10, only about three oil and refined product tankers passed through the Strait that day, while LNG and LPG ships crossing was zero, compared to a normal level of about 35 vessels.

In other words, even if the blockade is lifted, the recovery of global natural gas supplies will lag far behind oil—a “gray rhino” underestimated by the market.

04

Dependence on imports
Why is China’s market relatively “resilient”?

Data shows that 89% of oil transported through the Strait of Hormuz flows to Asia. Among them, about 80% of Japan’s oil imports and over 40% of China’s oil imports pass through this route.

However, as a major energy importer, China’s performance in this crisis differs sharply from Japan and South Korea: according to Bloomberg, since late February, Japan’s stock market has fallen about 6%, South Korea’s about 9%, while the CSI 300 index has only declined 0.3%.

Why is China relatively “resilient”? Lin Boqiang offers four explanations:

First, “market stabilization” mechanisms are effective. Government measures to stabilize the stock market provided buffers at critical moments.

Second, differences in energy consumption structure. Oil and gas account for only about 27% of China’s energy consumption, far lower than the US (over 72%), the EU (over 60%), and Japan/Korea (even higher). Half of China’s energy consumption still relies on coal, so fluctuations in oil and gas prices have a less direct macroeconomic impact.

Third, price transmission has a “buffer period.” China’s refined oil pricing mechanism involves about a two-week (10 working days) adjustment cycle, preventing immediate reflection at gas stations like in the US, thus providing a shock absorber for market sentiment.

Fourth, strategic foresight and “deep reserves.” China has long prioritized energy security, stockpiling large amounts of strategic oil reserves during last year’s low oil prices; more importantly, the combination of wind, solar, energy storage, and electric vehicles has promoted low-carbon transformation and fundamentally enhanced energy independence. Additionally, China has established four major oil and gas import channels—the Central Asia pipeline, China-Russia pipeline, maritime routes, and China-Myanmar pipeline—effectively diversifying reliance on a single chokepoint.

“China fears ‘shortages,’ not ‘price hikes,’” Lin says, because oil and gas consumption are relatively small, and the government has room for price intervention. The real risk lies in long-term, comprehensive supply disruptions. The key question now is: how long will the Strait of Hormuz be “completely closed”?

05

Lessons from the crisis
The ultimate solution for energy security is “localization”

Every geopolitical crisis is a stress test for energy security. This time, the world is forced to face a stark reality: dependence on distant fossil fuels ultimately hands over control to others.

Lin Boqiang states that the US-Iran conflict has, in a way, greatly affirmed China’s energy transition strategy. The path of wind, solar, energy storage, and electric vehicles is highly forward-looking.

Dependence on fossil resources depends on resource endowment—if you have it, you have it; if not, you don’t. Transport routes can be cut off by geopolitical conflicts at any time. Wind and solar energy, however, do not rely on resource endowment and can be fully localized; electric vehicles replace demand for transportation fuels. Together, these reduce reliance on imported oil and gas at a fundamental level.

Lin predicts that after the US-Iran conflict, most countries will strive to localize energy, but for many, only wind and solar can truly be domestically developed.

For China’s energy security, Lin emphasizes that the most urgent bottleneck—and the biggest opportunity in recent years—is energy storage.

Behind this is the increasing cost of relying on coal-fired power as a “backstop” for renewable energy. He notes that the utilization hours of coal power have dropped from the designed 5,500 hours to 4,400 hours in 2024, meaning efficiency costs will be borne by someone. While energy storage is “expensive now but cheaper in the future,” scale effects and technological progress point to a clear downward trend, making it a strategic link that must be developed.

On electric vehicle technology, Lin suggests that the current urgent focus should be on solving the low-temperature performance of solid-state batteries. China’s EV penetration rate has exceeded 50%, and in the future, southern regions may rarely see fuel vehicles, but in northern cold climates, EV range still faces significant challenges.

He also offers a forward-looking view: the US, worried about a huge power gap for AI computing centers, should abandon geopolitical biases and consider adopting China’s “photovoltaic + energy storage” solutions, which are cheaper than building new gas-fired power plants.

“The key is what we can learn from this conflict,” Lin says.

The answer may already be written in this storm: in the short term, geopolitical tensions will continue to disturb oil prices, and the public should be alert to rising fuel prices and imported inflation. But in the long run, an autonomous energy system based on renewable energy, electric vehicles, and energy storage as a “ballast” is the ultimate solution to facing an uncertain world.