© 2024 Connecticut Public

FCC Public Inspection Files:
WEDH · WEDN · WEDW · WEDY
WECS · WEDW-FM · WNPR · WPKT · WRLI-FM · WVOF
Public Files Contact · ATSC 3.0 FAQ
Play Live Radio
Next Up:
0:00
0:00
0:00 0:00
Available On Air Stations

China Has A Lot At Stake As Attacks In Persian Gulf Rise

ARI SHAPIRO, HOST:

Saudi Arabia said today that the oil facilities damaged in last weekend's attacks should be running at normal levels by the end of the month. The attack sent oil prices sharply higher all over the world. One of the countries most affected was China. It imports more oil than any other country. As NPR's Jim Zarroli reports, that makes China especially vulnerable to instability in the Middle East.

JIM ZARROLI, BYLINE: In recent decades as China has grown, so too has it's thirst for oil. It now consumes some 12 million barrels every day. And Gabriel Collins of the Baker Institute at Rice University says it's had a major impact on prices.

GABRIEL COLLINS: China's influence over the global oil market for the last 10 to 15 years has been absolutely tremendous.

ZARROLI: China still consumes a lot less oil than the United States, but it produces only about a third of what it needs domestically.

COLLINS: They have the same problem that we do. They produce a lot of oil, but they consume even more. And so they're a net importer.

ZARROLI: In fact, China is hugely dependent on oil imports. And even more than the United States, it's vulnerable to oil shocks, such as hurricanes and wars and revolutions overseas. To keep the oil flowing, China does several things. First, it has a lot of suppliers around the world. It doesn't depend on any one country to buy the oil it needs. Roger Diwan is an energy analyst at IHS Markit.

ROGER DIWAN: What it does, it buys from everybody - Saudi Arabia, the UAE, Iraq, Iran, Kuwait, Qatar, et cetera. So they're trying to diversify to keep that supply coming.

ZARROLI: China was even buying about 500,000 barrels of oil a day from the U.S. until recently. China also tries to maintain good relations with oil-producing countries in the Middle East. When there's a major conflict affecting oil producers, such as the Iraq War, China has tended to stay neutral. And Gabriel Collins says when Beijing has inserted itself into Middle Eastern affairs, it's tended to play a quiet, behind-the-scenes role.

COLLINS: The Chinese have an obvious interest in that you don't want to see a war in the region that supplies the bulk of your imported crude oil.

ZARROLI: And even as the Trump administration has tried to ostracize Tehran, China and Iran have maintained cordial relations.

As Washington has tightened sanctions on Iran, the biggest Chinese oil companies have stopped doing business with it. But Roger Diwan says China still buy some oil from Iran.

DIWAN: They have created these shell companies which only trade with Iran and don't choose a dollar. So they're really outside of the reach of the sanctions.

ZARROLI: The Trump administration isn't happy about that. Secretary of State Mike Pompeo made this thinly veiled threat earlier this year.

(SOUNDBITE OF ARCHIVED RECORDING)

MIKE POMPEO: Any nation or entity interacting with Iran should do its diligence and heir on the side of caution.

ZARROLI: But China is still buying oil from Iran. China has also made major investments in the Iranian energy industry. But Michal Meidan of the Oxford Institute for Energy Studies says China has an advantage by being so big. She says China has become such a huge market for oil that countries such as Saudi Arabia will do what they can to keep Beijing happy. And if for some reason supplies start to run low, she says China and the rest of Asia will be a priority.

MICHAL MEIDAN: So while they will cut cargoes and volumes perhaps to European buyers or potentially even to the U.S., they will want to keep their flows to Asia steady because China, but also India and Northeast Asian countries, are their biggest demand centers.

ZARROLI: China depends on countries such as Saudi Arabia and Iran to meet its oil needs. But they very much depend on China in return.

Jim Zarroli, NPR News, New York.

(SOUNDBITE OF KUDASAIBEATS' "LIMITED") Transcript provided by NPR, Copyright NPR.

Jim Zarroli is an NPR correspondent based in New York. He covers economics and business news.

Stand up for civility

This news story is funded in large part by Connecticut Public’s Members — listeners, viewers, and readers like you who value fact-based journalism and trustworthy information.

We hope their support inspires you to donate so that we can continue telling stories that inform, educate, and inspire you and your neighbors. As a community-supported public media service, Connecticut Public has relied on donor support for more than 50 years.

Your donation today will allow us to continue this work on your behalf. Give today at any amount and join the 50,000 members who are building a better—and more civil—Connecticut to live, work, and play.