Hormuz Disruption Forces China to Rebuild Its LNG Supply Chain
Chinese LNG imports from Qatar collapsed 98% in Q2 2026 as Beijing negotiates decade-long supply deals with exporters that bypass the Strait of Hormuz.
A Foreign Policy ranking of the world's top supply-chain chokepoints, published Tuesday (2026-08-04), placed the Strait of Hormuz near the top of the list. China's LNG buyers had already drawn their own conclusion. In the second quarter of this year, China imported roughly 100,000 tonnes of LNG from Qatar, down from as much as 4.7 million tonnes in the same period of 2025 — a collapse of more than 97% — according to ship-tracking data compiled by Bloomberg.5,3
China had been Qatar's single largest LNG customer and sourced nearly 30% of its LNG supply from the Gulf exporter in 2025. That concentration has become an acute exposure. The Strait of Hormuz remains disrupted following U.S. and Israeli strikes on Iran, with the conflict and the waterway's closure continuing to threaten China's energy security, oilprice.com reported.3,4
The response is a supplier pivot on a decadal scale. PetroChina and Sinopec — among China's biggest LNG buyers — are in talks with exporters for potential deliveries starting before 2030, to run for at least ten years, Bloomberg reported, citing sources familiar with the discussions. The goal is supply secured along routes that don't touch Hormuz at all.3
EIA data give a sense of what's at stake in that strait. In 2022, it handled an average of 21 million barrels per day of oil — approximately 21% of global petroleum liquids consumption — a figure the EIA describes as making Hormuz the world's most important oil transit point. Throughput had risen by 2.4 million barrels per day between 2020 and 2022 as demand recovered from the COVID-19 downturn.1
Producers with bypass options have been using them. Saudi Arabia had already redirected roughly 70%-75% of its crude exports through the East-West pipeline to the Red Sea port of Yanbu, with Standard Chartered estimating Yanbu loadings at approximately 4.5 million barrels per day. Saudi Aramco's East-West pipeline was temporarily expanded to 7 million barrels per day capacity in 2019 when it converted some natural gas liquids lines to accept crude. The UAE routes oil through a separate 1.5 million barrel per day pipeline to the Fujairah terminal on the Gulf of Oman, clearing Hormuz entirely.4,1
But Riyadh's own rerouting created a second vulnerability. Standard Chartered noted that roughly 7 million barrels per day were transiting the Bab el-Mandeb Strait before Houthi attacks — a volume swollen precisely because Saudi Arabia had diverted its exports toward the Red Sea. Oil markets, Standard Chartered concluded, must now price two chokepoints rather than one.4
China's public position — calling for "safe and unimpeded passage" through Hormuz in early July (2026-07-03) — has not reversed the disruption. Bloomberg News reported that people familiar with European thinking described some form of vessel transit fee payable to Iran and Oman as a given in the conflict's aftermath. What that fee would add to the delivered cost of Gulf crude into European refineries has not been made public.2
ICE Brent crude front-month fell 4.4% to $96.36 per barrel at 1:35 p.m. ET on Friday (2026-07-24) after reports that Pakistan was attempting to broker a return to U.S.-Iran nuclear negotiations, with China said to be strongly backing the effort. WTI crude for September delivery fell 3.6% to $88.86 on the same session. By early Friday (2026-08-07), ICE Brent had retreated further to $83.49 per barrel — down roughly 13% from the already-lower July 24 reading, with diplomatic optimism weighing on futures even as the physical disruption through the strait persists.4
Saudi and UAE bypass pipelines are running hard but not without limits. Yanbu loadings at 4.5 million barrels per day represent a substantial share of Saudi's total export capacity, and the East-West line's 7 million barrel ceiling provides less headroom than it appears given ongoing Red Sea complications. If Pakistan's mediation effort fails to produce even a preliminary framework, the dual-chokepoint pricing Standard Chartered identified as a market reality would likely reassert itself sharply. The pace at which Beijing is locking in decade-long LNG supply outside Hormuz suggests China's energy planners are not counting on diplomacy to resolve the strait's status soon.4,1,3