Strait of Hormuz blockade could strain US-China relations and hit NZ economy
Wednesday, 15 April 2026
The US blockade in the Strait of Hormuz is unlikely to trigger direct conflict with China, a foreign policy expert says, but could have significant ripple effects for economies around the world - including New Zealand’s.
The naval blockade of Iranian ports - designed to restrict Tehran’s ability to profit from oil exports after it effectively closed the strait and suggested a toll - came into force in the early hours of Tuesday (NZT)
Stephen Hoadley, a retired Associate Professor of International Relations at the University of Auckland and editor of the Professional Journal of the Royal New Zealand Navy, said the development had major implications for Beijing.
“Some 90% of China’s oil comes from the Middle East, not only from Iran but also from the other Gulf states and very little of that is moving through. So China’s concern with any blockage whether it's by Iran, although Iran has allowed China bound ships through, will be about reduced supplies.”
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However, China had a “large stockpile” of oil so its concerns would be longer-term. There would be no immediate crisis, in his view.
“…Certainly in the longer term China is going to be concerned about the supply not only of oil, but also natural gas, of fertiliser, of helium … and also how to get their products back into the Middle Eastern markets, particularly the very lucrative Gulf state market, which China is has been cultivating.”
He described the blockade as “selective” and said China would be seeking to clarify the United States’ intentions in the strait to ensure its ships weren’t unnecessarily stopped, boarded and sequestered.
The risk of escalating tensions in US-China relations, while not zero, was unlikely as both sides stood to lose out, he said.
“The United States Navy is very careful not to provoke Chinese retaliation. The Chinese are not going to send warships down to face off and harass the US Navy in the way they do the Philippine Navy in the South China Sea.
“China is not going to raise this because at the end of the day, Trump is threatening large tariff increases on China if China doesn't accept the status of the Hormuz Strait blockade and China has counter threatened to restrict the export of refined rare earth metals that the United States needs. So both sides are concerned to avoid a trade escalation that could be precipitated by the blockade.”
China has fired a verbal warning shot in response to the naval blockade being stood up. its Defence Minister Dong Jun said the strait was “open to us” and that Beijing expected others “not to interfere” in its energy agreements with Iran.
Hoadley said China’s decent oil reserves and alternative sources of energy through pipelines from Russia meant it would likely “wait and see” how long the blockade would last before considering direct confrontation or intervention. But here was “always the possibility” developments could spiral given the unpredictability on both sides, he added.
Hoadley said any further slowing of China’s economy would be bad news for New Zealand.
“If energy supplies to China decline for any reason, China's economy will slow accordingly and the demand for New Zealand products will decline proportionately. So we want China to prosper economically because a prospering China is a prospering China market and that’s our number one source of export revenue.
“We need the extra revenue because we're going to be paying more for energy and therefore we need more income. Milk prices are at a record high and farmers temporarily are very happy and that hopefully will flow through to the economy … but this is temporary, it’s a one off and if the China market collapses, those milk prices are going to go down for milk powder in particular.”
David Capie, an international relations expert, said the fallout of the US blockade came at a time when Beijing was trying to position itself as a responsible leader.
“China's expressed particular concern about the US blockade calling it dangerous but also at the same time, China’s probably quite keen to play up an image of itself as a sort of responsible international actor and to portray recent US actions as sort of challenging international peace and security. So it cuts in different ways for the relationship.”
Despite the risk of escalating tensions, Capie said he didn’t expect relations would deteriorate into direct confrontation between Washington and Beijing.