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Gatestone Institute Senior Fellow Gordon Chang joins ‘Mornings with Maria’ to break down the impact of escalating US-Iran tensions on global oil markets and China’s reliance on Middle Eastern energy.
With traffic in the Strait of Hormuz almost at a standstill, China’s dependence on Iranian oil could lead to “real problems” within two months if the crisis continues, an expert has warned.
Gatestone Institute Senior Fellow Gordon Chang joined FOX Business’ Maria Bartiromo on “Mornings with Maria” to assess how rising tensions around the Strait of Hormuz could ripple through China’s fragile export-dependent economy.
OIL PRICES RISE AFTER STRIKES KILL IRAN’S SUPREME LEADER, FENCES CLOSE ON STRAIT OF HORMUZ
Oil tanker in a port in the Strait of Hormuz. (Giuseppe CacaceI/AFP via Getty Images)
Chang noted that a significant portion of Iranian crude oil discounted from Chinavital to its independent “teapot” refiners, it typically transits the narrow waterway, where ships are now largely stalled north and south of the strait.
“A lot of that oil … is actually going to China trying to get to between … 15 percent to 23 percent of their oil carried through the sea from Iran, and that oil goes through the Strait of Hormuz,” Chang said.
He added that while Beijing has diversified supplies, the loss of deeply discounted barrels comes at a vulnerable time for factories that depend on cheaper energy.
“This will go through the system, and I suspect you will see real problems in two months in China if this situation continues,” Chang said.
Hayman Capital Management founder and CEO Kyle Bass looks at the global oil market as tensions in the Middle East rise on “Morning with Mary.”
Hayman Capital Management founder and CEO Kyle Bass also joined FOX Business’ Maria Bartiromo discuss the market reaction and the broader energy shock affecting global supply chains.
OIL MARKETS ON BOARD AS IRAN MOVES TO RESTRICT VITAL STRAIT OF HORMUZ SHIPPING LANE, REPORT SAYS
Bass pointed to insurance withdrawals and the strategic weight of the choke point, warning that even a temporary disruption could push first-month crude prices higher.
“About a third of the world’s seaborne crude flows through this strait every day. Fifty percent of China’s imports flow through this strait every day. And right now, things don’t go through the strait,” Bass said.
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“If 10 million barrels are gone or delayed for a week, there’s no telling where the front end can go,” Bass added.
With insurers pulling out, LNG shipments halted and tanker traffic effectively frozen, the crisis underscores how a five-mile-wide passage can shape the economic trajectory of the second largest economy in the world.
“We’re at risk of a pretty significant rise in oil prices,” Bass said.
