Trump’s Hormuz blockade tests US relations with China and India

The US blockade on the Strait of Hormuz is not only pressuring Iran but also putting pressure on its two most important relationships in Asia – India and China.

About 98% of Iranian oil exports are bound for China, and with a summit between President Donald Trump and Chinese leader Xi Jinping just weeks away, Washington’s maximum pressure campaign on Iran risks destabilizing the delicate relationship the administration has carefully cultivated with Beijing.

India, because of its complex relations with the US, is increasingly finding US policy contrary to its economic interests – most acutely the energy blow to its economy.

Trump is scheduled to visit China in mid-May, and the administration has repeatedly signaled in recent weeks that it wants to keep bilateral relations stable enough to keep a high-level meeting on track.

“The Iran conflict, particularly the blockade, could derail this effort,” said Wendy Cutler, vice president of the Asia Society Policy Institute and a former US trade negotiator.

Signs of friction are already emerging. Beijing, which had largely maintained its stance on Trump’s blockade, appeared to toughen its tone on Tuesday. Foreign Ministry spokesperson Guo Jiaqun criticized this move as “dangerous and irresponsible”, and that it would only “inflame tensions.”

More than a month into the war, Trump made a familiar move when he threatened to impose 50% tariffs on China if Beijing supplied arms to Iran. Beijing pushed back, rejecting what Guo called “groundless stigma and malicious overtones.”

“China will resolutely retaliate against any US attempts to use arms sales as a pretext for additional tariffs,” Guo said.

Meanwhile, India is facing a different kind of pressure. Its heavy dependence on imported energy has made it more vulnerable to the economic consequences of conflict.

Earlier this month, India resumed purchasing Iranian oil and gas after a seven-year hiatus, under a temporary US waiver, securing safe passage for its ships through the strait from Tehran.

Indian Prime Minister Narendra Modi, after a about 40 minutes call With Trump on Tuesday, the two leaders said “Useful exchange of ideas” on the Middle East conflict and India “supports early de-escalation and restoration of peace.”

Even if Washington makes special provisions for India, they are unlikely to cover the full scale of New Delhi’s gas needs, said Arpit Chaturvedi, South Asia geopolitical risk consultant at consultancy Teneo.

As the US blockade tightens, India will likely stop its crude oil imports from Iran, Chaturvedi said, otherwise “we will see relations between New Delhi and Washington deteriorate.”

At the moment, “there is no incentive for India to further risk its relationship with Washington and bring it closer to a point of no return,” Chaturvedi said.

However, the energy shock is impacting the two Asian economies differently.

China’s risk of an energy shock is more manageable than other major economies due to its vast oil reserves and diverse energy mix.

The scale of Iranian flows reaching China also underlines how structurally intact Tehran’s oil trade is. Maritime intelligence firm Windward estimated that about 157.7 million barrels of Iranian crude oil was at sea as of Tuesday, about 98% of which was destined for China.

China’s strategic and commercial oil reserves, combined with barrels in transit, Cover more than 120 days of net imports, said Dan Wang, China director of Eurasia Group. “If only Iranian barrels were destroyed, China could absorb this shock by diversifying into other sources and returning to coal,” he said.

US Treasury Secretary Scott Besant on Tuesday reportedlyIncredible Global Partners“During the conflict, Beijing was criticized for hoarding oil supplies rather than mitigating the global crisis.

In contrast, India has no comparable buffer. As the world’s third-largest oil importer, India’s net flows are 3.5% of GDP, making it one of the most vulnerable economies to a blockade, said Sumedha Dasgupta, senior economist at the Economist Intelligence Unit.

With oil supplies remaining in less than 60 days, New Delhi will face a very difficult situation if Middle East flows are further disrupted.

The situation is particularly dire for liquefied petroleum gas, a major cooking and heating fuel for homes and commercial establishments. Dasgupta said India has no meaningful strategic LPG reserves and the reserves with refiners and distributors can meet only two to three weeks of demand if imports stop.

Almost all of India’s LPG imports come mainly from the Middle East. 66% of demand Last year.

Analysts say that there is little possibility of a sharp retaliatory move from Beijing and New Delhi, which may soon sour their relations with America.

The blockade – similar to the “Liberation Day” tariffs – is non-discriminatory and applies to all buyers of sanctioned Iranian crude, except China, Wang said. “Beijing will protest at the diplomatic level, but is unlikely to escalate into a major retaliation.”

Meanwhile, after Washington’s waiver ends, India may shift energy imports from Iran to Russia, the US, Australia and other suppliers, Chaturvedi said.

“Modi is unlikely to cross any of the red lines drawn by Trump,” he said.

Still, any miscalculation or direct confrontation at sea could rapidly deteriorate the diplomatic stance and jeopardize the delicate stability in relations between Washington and Beijing.

“The US intercepting a Chinese vessel would potentially become a major incident, (because) China would make a point of standing up to the US in such a situation,” said David Mealey, head of the China practice at Eurasia Group.

A US-sanctioned tanker belonging to China slipped through the Strait of Hormuz into the Gulf of Oman on Tuesday after Trump’s naval blockade was imposed.