Beijing: The Iran war has triggered a severe global energy crisis, with disruptions accelerating the world’s shift away from fossil fuels and toward clean technologies and renewable power—an arena in which China already holds a commanding position.
As supply chains strain and prices spike, Beijing’s long‑built advantage in batteries, solar panels, and electric vehicles is poised to translate into concrete economic gains, even as oil‑dependent economies struggle with shortages and record‑high fuel costs. The conflict has effectively turned a long‑term energy transition into an immediate geopolitical and commercial reality, with China well‑positioned to emerge as a primary beneficiary.
Most of the oil and gas that once flowed through the largely shut Strait of Hormuz was destined for Asian markets. Asian nations are now scrambling to conserve energy and shore up dwindling reserves while a fragile ceasefire hangs in the balance. In the United States and Europe, gasoline prices have climbed sharply, underscoring the vulnerability of fossil‑fuel‑dependent systems.
Although much of Asia is being hit hard by the disruption, China stands to gain even as the world’s largest purchaser of Iranian oil. Chinese industries already dominate global production of batteries, solar panels, and electric vehicles, and analysts expect demand for these renewable‑linked products to rise as countries seek alternatives to unstable hydrocarbon markets.
Before the Iran war erupted in late February, China’s lead in clean technologies was already widening. Under President Donald Trump, the United States had scaled back renewable‑energy ambitions and leaned instead on its vast oil and gas reserves, promoting energy exports as part of what Trump described as “energy dominance.”
At present, Chinese industrial giants such as vehicle‑maker BYD and battery‑producer CATL are well‑placed to capitalize on growing global interest in low‑emission energy products as the world confronts the fragility of fossil‑fuel supplies. “China’s approach to energy sector development and geopolitics has been completely validated by the Iran conflict,” said Sam Reynolds with the U.S.‑based Institute for Energy Economics and Financial Analysis.
Duelling Visions For Energy Future
Over the past decade, Chinese President Xi Jinping has explicitly tied energy security to national security, driving a sustained push into renewable energy even as fossil fuels still dominate the country’s domestic energy mix.
China manufactures more than 70% of the world’s electric vehicles and roughly 85% of battery cells, according to the International Energy Agency. Its current five‑year plan through 2030 continues to prioritize these industries, reinforcing China’s position at the forefront of the global clean‑tech sector.
“They are at the very forefront of this, more so than any other countries in the world, certainly more so than the United States,” said Li Shuo, director of the Asia Society Policy Institute’s China Climate Hub.
The United States, by contrast, remains the world’s top oil producer and has focused heavily on liquefied natural gas exports. The American approach, summarized by Trump as “drill, baby, drill,” continues to favour fossil fuels over renewables, even as other countries seek to diversify away from oil‑ and gas‑dependent systems.
Markets were already witnessing a “bifurcation” before the war, Reynolds said, as the two superpowers pushed very different energy futures and left smaller economies to navigate complex choices about which path to follow.
Investors Bet On Renewables Boom
The Iran war is driving demand for Chinese technology, whose exports of solar panels, batteries, and electric cars reached almost $22.3 billion in December — one of the highest monthly figures on record and up about 47% from the same month a year earlier, according to the think tank Ember. Much of that surge has gone to Southeast Asia and Europe.
Investment in renewable power and battery storage—designed to store energy when the sun does not shine or the wind does not blow — is expected to increase in countries heavily dependent on energy imports, including several European nations, according to the credit rating firm Fitch Ratings.
Investors are betting the war will accelerate demand for renewables. In March, CATL and BYD’s Hong Kong‑traded shares rose roughly 24% and 11%, respectively.
Over the past few years, Chinese automakers have been expanding EV development and production while growing exports faster than American or European rivals, offering cheaper models and gaining ground in regions such as Southeast Asia. These trends are expected to accelerate further as the energy shock wears on.
“The energy shock is going to help the Chinese industry globally and hurt the American car industry globally,” said Amy Myers Jaffe of New York University’s Centre for Global Affairs.
High U.S. tariffs have largely shut Chinese EVs out of the American market, but within China, rising fuel prices may boost domestic demand for BYD vehicles, according to Chris Liu of the research and advisory firm Omdia.
A Global Turn Toward Clean Energy
Households facing higher energy costs are likely to shift toward cleaner power sources, said James Bowen of the Australia‑based consultancy ReMap Research.
Pakistan offers an early example. Its renewable rollout since 2017 has led to the import of more than 50 gigawatts of Chinese solar panels by December 2025. Pakistan still imports about a third of its energy needs; about 80% of its oil flowed through the Strait of Hormuz, and Qatar had supplied roughly a quarter of its LNG. “The shock isn’t as big as it would have been without solar,” said Nabiya Imran of Renewables First. If prices remain high, solar could save Pakistan $6.3 billion in fossil‑fuel imports over the next year, according to think tanks Renewables First and the Centre for Research on Energy and Clean Air.
In the United Kingdom, EV leasing demand jumped by more than a third in the first three weeks of March compared with a similar period in February before the war, according to Octopus Energy, a renewable‑energy group. The company also reported increases in rooftop solar sales and solar‑related inquiries.
In Southeast Asia, Vietnamese EV maker VinFast is offering discounts to help customers offset the fuel‑price shock. Prolonged fuel spikes may act as a future catalyst for EV adoption, but Patrick Tan of the energy consultancy Aurora Research said it will take time to see the full effect in purchase patterns, partly because customers are waiting to see how the conflict ultimately plays out.
Even Indonesia, the world’s largest coal exporter, is recalibrating its energy strategy in ways that could make it a bigger customer for China’s clean‑energy technology. In March, Indonesian President Prabowo Subianto announced a push into electric vehicles, including plans to produce electric cars domestically and expand charging infrastructure.
“The dream of electrified transportation is gaining renewed attention,” said Putra Adhiguna of the Jakarta‑based think tank Energy Shift Institute.
Chinese firms play a major role in Indonesia’s clean‑energy supply chain. They signed more than $54 billion worth of deals with the state electricity utility in 2023 and added a new $10 billion pledge during Prabowo’s 2024 visit to Beijing.
“There will be direct financial benefits to Chinese companies,” said Reynolds of the Institute for Energy Economics and Financial Analysis.
