By Boo Kok Chuon

The official language of war is always cleaner than the war itself. States speak of security, deterrence, peace, and stability. Markets, however, tend to speak more honestly.

In the present Iran crisis, oil prices surged, Gulf shipping routes tightened, and Asian refiners began adjusting supply expectations. That reaction tells us something basic: whatever else this war may be, it is also an oil shock.

And because China is the world’s largest crude importer, any serious disruption involving Iran and Venezuela inevitably intersects with China’s strategic interests.

The argument presented here is not that oil is the only cause of conflict. It is that oil is far too central to be dismissed as incidental.

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How the Iran and Venezuela conflicts affect global oil supply — especially China

Iran matters primarily because of geography.

The Strait of Hormuz sits beside it, and that chokepoint normally carries roughly one-fifth of the world’s oil trade. Any conflict around Iran therefore threatens the flow of energy that powers global industry.

This matters disproportionately for Asia.

China imports over 11 million barrels of crude oil per day, making it the world’s largest importer. Roughly half of those imports originate from the Middle East, making Chinese energy security particularly sensitive to instability in the Gulf.

Iran itself has remained a significant supplier to China. Despite sanctions, Chinese refiners have continued purchasing Iranian crude through indirect trading channels. Estimates suggest imports have reached around 1.3–1.4 million barrels per day, representing a meaningful share of China’s seaborne supply.

Venezuela matters for a different reason.

Where Iran threatens transit routes, Venezuela represents reserves. Beneath its territory lies the largest proven oil endowment in the world—over 300 billion barrels, representing nearly one-fifth of global reserves. Much of this resource sits within the vast Orinoco Belt, a geological formation containing immense deposits of heavy and extra-heavy crude. Although technically challenging and capital-intensive to extract, the sheer scale of these reserves ensures that Venezuela remains one of the most strategically consequential hydrocarbon basins on the planet.

This resource base also explains Venezuela’s long-standing energy relationship with China. Over the past two decades Beijing has provided tens of billions of dollars in financing to Venezuela, much of it structured as oil-backed loans repayable through crude shipments. As a result, China has emerged as one of the largest destinations for Venezuelan oil exports. In strategic terms, therefore, Venezuela does not merely represent reserves in the abstract; it represents a reserve base partly integrated into China’s long-term energy security framework.

Together, the strategic structure becomes clearer:

• Iran affects global oil flows
• Venezuela affects global oil reserves

Both sit at critical points in the energy system.

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Could China’s aggressive oil accumulation be a trigger?

“Trigger” may be too strong a word. But as an inference, it is difficult to dismiss.

Over the past two years, China has been accumulating crude at an unusually rapid pace.

Chinese imports have averaged roughly 11 million barrels per day, while refinery consumption has not always kept pace. The difference suggests significant stockpiling.

Analysts estimate China’s strategic petroleum reserves now approach 1.3–1.4 billion barrels, with substantial additional storage capacity still available.

At certain periods China has been adding close to one million barrels per day into storage.

Over a two-year period this translates into hundreds of millions of barrels of additional reserves.

From Beijing’s perspective such stockpiling is rational. China relies heavily on imported energy and remains vulnerable to disruptions along maritime routes such as the Strait of Hormuz or the Malacca Strait.

But from Washington’s perspective, a China that is simultaneously:

• building massive strategic reserves
• deepening ties with sanctioned oil suppliers
• expanding industrial and technological capacity

is not simply securing energy.

It is preparing for a world where energy supply may become strategically contested.

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3. China’s RMB oil strategy — and Singapore’s role

Oil is not merely a commodity. It is also part of the financial architecture of global power.

For decades global oil trade has been overwhelmingly denominated in U.S. dollars. That system reinforces constant global demand for dollar liquidity.

China has been gradually experimenting with alternatives.

One step was the creation of RMB-denominated crude futures markets in Shanghai, allowing oil contracts to be priced and settled in Chinese currency.

But pricing instruments alone are insufficient. Currency internationalisation requires clearing infrastructure.

Singapore plays an important role here.

In 2013 the People’s Bank of China designated the Singapore branch of ICBC as the official RMB clearing bank in Singapore, allowing banks across Southeast Asia to settle transactions directly in renminbi. (china-briefing.com)

More recently, DBS Bank was appointed as an additional RMB clearing bank in Singapore, further expanding renminbi settlement capacity within one of the world’s largest financial hubs. (reuters.com)

China has also developed the Cross-Border Interbank Payment System (CIPS), enabling cross-border RMB transactions to be cleared outside the traditional U.S.-centric financial network.

None of these developments replace the dollar overnight.

But they create something strategically important:

currency optionality.

If even a portion of oil trade migrates toward RMB settlement:

• China reduces exposure to U.S. financial sanctions
• global demand for dollar liquidity weakens incrementally
• the monetary system becomes more multipolar

From Washington’s perspective, these developments challenge a system that has existed for decades.

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4. Why oil is denominated in U.S. dollars: the Bretton Woods legacy

To understand the dollar’s dominance in oil markets, we must go back to the currency chaos that preceded the modern system.

Before World War I, much of the world operated under the gold standard, where currencies were directly linked to gold.

That system collapsed during the interwar period.

World War I forced governments to abandon gold convertibility so they could finance military spending. The Great Depression of the 1930s then triggered competitive currency devaluations as countries attempted to boost exports. International trade shrank dramatically as protectionism spread.

By the early 1940s policymakers feared that without a new monetary framework, the world could fall back into economic fragmentation.

In 1944 representatives from forty-four allied nations gathered at the
Bretton Woods Conference.

Their objective was to design a stable financial system for the post-war world.

The agreement created what became known as the Bretton Woods system, whose core features were:

1. Global currencies were pegged to the U.S. dollar
2. The U.S. dollar was convertible into gold at $35 per ounce
3. Two institutions were created to support financial stability:
   • the International Monetary Fund
   • the World Bank

The dollar became the anchor because the United States emerged from World War II holding the majority of the world’s gold reserves and the strongest industrial economy.

Even after the Bretton Woods gold link ended in 1971, the dollar retained its dominance.

One major reason was oil.

Global oil exports continued to be priced primarily in U.S. dollars, reinforcing worldwide demand for the currency. Because every economy requires energy imports, oil trade effectively locked the dollar into the center of the global financial system.

This arrangement became known informally as the petrodollar system.

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5. Financial power as national strategy: Xi’s February signal

Recent signals from Beijing further reinforce the strategic context surrounding currency and energy.

In February 2026, an article by President Xi Jinping published in Qiushi, the Communist Party’s principal ideological journal, called for accelerating the development of a modern financial system with Chinese characteristics.

The article emphasized the importance of building:

• a strong currency
• strong financial institutions
• secure financial infrastructure

These priorities were framed explicitly as pillars of national power.

The significance of the message lies not merely in its content, but in its timing. It appears alongside several developments already discussed:

• China’s aggressive accumulation of strategic oil reserves
• expansion of RMB settlement infrastructure, including offshore clearing hubs such as Singapore
• experimentation with RMB-denominated commodity pricing

Taken together, these moves suggest that Beijing is pursuing a dual strategy.

First, secure the physical foundations of energy supply through long-term resource relationships and strategic stockpiling.

Second, gradually construct the financial architecture necessary to reduce dependence on a dollar-dominated trading system.

Neither objective implies an immediate challenge to the existing monetary order. The dollar remains deeply embedded in global trade and finance.

However, when a country simultaneously strengthens its energy security and develops alternative currency infrastructure, the broader strategic direction becomes clearer.

Financial power, in this sense, is not merely an economic tool. It is an extension of geopolitical capability.

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5. Why the “oil war” inference is difficult to dismiss

No serious analysis should claim monocausality. Wars rarely have a single cause.

Security concerns, alliance politics, domestic pressures, and ideological narratives often interact.

Yet certain patterns are difficult to ignore.

Consider the convergence of several developments:

• Iran sits beside a chokepoint carrying 20% of global oil trade
• Venezuela holds some of the world’s largest oil reserves
• China has been aggressively stockpiling crude
• China is building infrastructure for RMB-denominated energy trade

When conflicts repeatedly converge around energy supply routes, reserve giants, and currency settlement systems, the inference that oil plays a central role becomes difficult to dismiss.

This does not prove that present conflicts are purely oil wars.

But it does make the alternative explanation—that oil is merely incidental—far less convincing.

Geopolitics rarely operates on a single motive.

Yet when supply routes, reserves, and monetary power intersect in the same theatres of conflict, one conclusion becomes increasingly hard to avoid:

Oil may not explain everything.

But it almost certainly explains more than we are officially told.

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When you write Part 2, your angle will actually be very strong because it will flip the mainstream narrative:

Most analysts say:

renewables → oil decline

But your thesis is:

renewables solve electricity, not transport and petrochemicals

Which is actually a much deeper energy systems argument.