Hormuz Closure Drives African Power Costs Higher as China Hunts Non-Gulf LNG Deals
Africa is absorbing higher electricity costs from Hormuz's closure while China races to lock in non-Gulf LNG supply for the next decade.
Africa's electricity prices have climbed in the months since the Strait of Hormuz closed to traffic, with fossil fuel price volatility feeding through import-dependent energy systems across the continent, an analysis published Saturday (2026-07-19) on OilPrice.com found.7
China's response to the same disruption is running on a different track. PetroChina and Sinopec are in talks for decade-long LNG supply agreements with exporters whose cargoes do not transit the strait, with potential deliveries targeted to begin before 2030, sources told Reuters on Thursday (2026-07-17).6
The scale of what both regions are responding to is now clearer. More than one billion barrels of oil have been removed from global supply by the Hormuz closure, and nearly 100 million additional barrels are lost every week it remains shut, Sultan Ahmed Al Jaber, chief executive of Abu Dhabi National Oil Co., said on Wednesday (2026-05-20). Al Jaber added that even if the conflict ended immediately, it would take at least four months to ramp oil flows back to 80 percent of normal levels. ICE Brent crude front-month was last quoted at $88.26 per barrel at Friday's close (2026-07-18), with Dubai crude at $75.19 per barrel.1
China entered the crisis with substantial buffers. Its strategic petroleum reserve holds an estimated 1.2 to 1.4 billion barrels, enough to cover roughly four months of net crude imports, according to CSIS research cited by News18 in late June (2026-06-23). Coal still accounts for around 56 percent of primary energy consumption and 58 percent of electricity generation, providing insulation that Africa's energy mix largely lacks. Wind, solar and nuclear together contributed 22 percent of China's primary energy in 2024.5
Even so, the underlying exposure is large. Around 50 percent of China's imported crude oil, representing 36 percent of its total crude supply, passes through Hormuz in a normal year. Nearly 30 percent of its imported natural gas follows the same route, though domestic production limits the overall gas exposure to about 7 percent of total supply, CSIS found. In 2003, then-President Hu Jintao identified the "Malacca dilemma," when 80 percent of China's oil moved through that strait. The Hormuz closure has revived that anxiety in sharper form.5,3
That vulnerability explains why the long-term LNG talks carry weight beyond their commercial terms. The buyers are not seeking spot cover. They are seeking structural re-routing before the next episode of disruption, and the scale of the contracts — at least ten years, with deliveries starting before 2030 — signals Beijing's intent to treat Hormuz dependency as a solved problem rather than a managed risk.6
Some supply has begun to move again. The Idemitsu Maru, a very large crude carrier, was expected to become the first vessel to transit the contested strait since the Iran war began, with arrival in Japan signalled by Idemitsu in late May (2026-05-22). Japan is one of Asia's biggest importers of Middle Eastern energy.4
The UAE is also extending its bypass infrastructure. An existing pipeline to the port of Fujairah carries a maximum of 1.8 million barrels per day of rerouted crude. A second bypass pipeline is roughly half-built as of Wednesday (2026-05-20), Al Jaber said, though no completion date was disclosed.1
For Africa, the bypass options are narrower. The continent holds 60 percent of the world's best solar resources, according to the OilPrice.com analysis, but the route from resource potential to installed generating capacity is measured in years and capital. The electricity price pressure compounds in the meantime.7
Power of Siberia 2 talks resurfaced during President Putin's visit to Beijing on Wednesday (2026-05-20), but the pricing gap remained unresolved at that point: China reportedly sought around $120 to $130 per thousand cubic meters while Russia pushed for terms closer to the original Power of Siberia 1 contract. Until that gap closes, China's state LNG buyers have every reason to diversify toward non-Gulf suppliers — and exporters in Canada, Australia, and the United States are in a strong position to set the terms.2