China Restricts Fuel Exports and Boosts Coal Buying as Hormuz Closure Nears Four Months

China Restricts Fuel Exports and Boosts Coal Buying as Hormuz Closure Nears Four Months Gulf crude and LNG flows halted since May are forcing Beijing to ration products and lift coal imports as the Strait's closure stretches toward a fourth month. A Chinese court handed Evergrande founder Hui Ka Yan a life sentence on Thursday (2026-08-20), closing one of China's biggest financial fraud cases as Beijing simultaneously manages a more acute supply shock: the sustained closure of seaborne crude and LNG export routes through the Strait of Hormuz, now approaching its fourth month since the American-Israeli war with Iran began.⁶ ICE Brent crude front-month stood at $93.60 a barrel as of August 22. In the war's second week, The Economist reported the price had risen around 40% since hostilities began; it has held near those elevated levels through the summer.¹ The scale of Asia's dependence on the Strait explains the disruption's reach. In 2025, Asia absorbed 87% of the crude and 86% of the LNG transiting Hormuz, according to The Economist. The Gulf supplies between 40% and 80% of the seaborne crude imports of China, India, Japan and South Korea, with the range reflecting each country's domestic output, but all four reliant on the same chokepoint when Gulf supply flows.¹ China entered the crisis holding roughly 1.3 billion barrels in strategic reserves, enough by Beijing's own calculation to cover approximately a year of lost Gulf imports. Yet authorities have not treated the buffer as a reason to wait. Chinese officials ordered large domestic refiners to suspend exports of diesel and petrol.¹ That order sits on top of production cuts already running inside the refinery system. Many Chinese plants are trimming crude throughput by 10% or more, according to Kpler. The combination of restricted product exports and lower run rates points to a government managing for an extended disruption, not a quick resolution at the Strait.¹ European gas markets have registered the Hormuz shock through the LNG channel. ICE Endex TTF front-month closed at €65.83 per megawatt-hour on August 22. The Economist reported that European natural gas prices had already risen 92% from pre-war levels in the weeks after the conflict began, as Gulf LNG that would ordinarily travel west became unavailable.¹ JKM Asian LNG spot closed at $22.94 per MMBtu on August 22. The Council on Foreign Relations assessed in May that the war had generated massive uncertainty about the Middle East's energy future and rocked the global economy as Tehran effectively blocked commercial flows through the Strait.² Coal has become the most visible substitute fuel. China has lifted seaborne thermal coal purchases to compensate for soft domestic output, while Japan and South Korea are adding import volume as energy security concerns shape their buying, Mining Weekly reported. Newcastle coal physical stood at $124.55 a tonne on August 22; the COAL ETF added 2.9% to close at $26.65.⁴ Trump's threatened 25% tariff on countries that continue trading with Iran adds further complexity, potentially narrowing the supply-side choices available to economies that have been sourcing any barrels through Iranian-linked channels.³ According to OilPrice.com's July analysis, the Hormuz tensions were already altering energy security calculations, diplomatic alignments and trade relationships across the region in ways that extend beyond the supply disruption itself. How long the Strait stays effectively closed is the variable that shapes whether those route adjustments and fuel switches prove lasting.⁵