The Iranian attack on a Qatari Liquefied Natural Gas tanker and two other ships near Oman early Wednesday morning local time was designed by the hard line Iranian Revolutionary Guards Corps to ensure that the new dominance Iran gained over shipping through the Strait of Hormuz during the 39-Day War this spring is not eroded by the United States and the Arab Gulf states. Washington and its Arab allies want to reopen free shipping through the Strait by having ships use the corridor near Oman rather than the northern, Iranian route. Iran and Oman share the Strait since their territorial waters stretch across it, meeting in the middle. The IRGC insists that all ships going through the Strait must register with Tehran and use Iranian-approved routes.
The U.S.-Iran Memorandum of Understanding is ambiguous, with Iran holding that its demand that ships register with it does not contradict its more general opening of the Strait to passage. The Neoconservative wing of the Trump administration, exemplified by Secretary of State and National Security Adviser Marco Rubio, completely rejects Iran’s registration procedures and does not accept Iran’s plans to retain control of the Strait in the future and to levy “administrative fees” on ships passing through it. Rubio encouraged the Arab Gulf states to defy Iran by using the Oman corridor. Wednesday’s attacks were the IRGC’s response. This game was played out the last weekend of June, as well. The U.S. response, bombing southwestern Iran, is ineffectual. We have already seen that 13,000 US and Israeli air attacks on Iran accomplished little from a military point of view, and that hasn’t changed.
Trump himself wants the oil to flow so gasoline prices in the U.S. fall in time to save him from taking a bath in the midterm elections, and he does not appear to mind if Iran makes ships register. But U.S. hardliners are challenging Iran on the issue, possibly encouraged by Israel and the United Arab Emirates, who lost the 39-Day War and do not want to accept the consequences of that defeat.
In response to the tit-for-tat strikes, the Trump administration rescinded its waiver on Iran oil sanctions, which had allowed Iran freely to export its petroleum causing global oil prices to fall in line with Trump’s gasoline price theory of the midterms. But in response to the IRGC refusal to see its strategic advantage chipped away at, the administration reimposed sanctions on Iranian petroleum. Those sanctions are unilateral and are rejected by China for that reason. There is no basis in international law for the United States to wake up in the morning and say Iran cannot sell oil to e.g. India or China.
Predictably, oil prices went back up, both on news of the exchange of fire in the Gulf, from which 22 percent of the world’s crude oil comes, and the renewed sanctions on Iran.
There is no reason to believe that this kind of occasional U.S.-Iran skirmish will cease any time soon. As I wrote when Benajmin Netanyahu and Donald Trump launched their unprovoked and illegal war on Iran, they have permanently destabilized the Gulf as a world energy source.
Because petroleum and fossil gas are now so unstable as energy sources, wise governments are plotting to escape their use in favor of reliable, clean, local energy sources such as solar, wind, water and battery for electricity generation and batteries for electric vehicles.
The front runner in this effort is China. China has used its refineries’ petroleum reserves to slash petroleum imports from 11.5 million barrels a day to an astonishingly low 6.4 million barrels a day (this latter statistic is seaborne petroleum imports for June).
A glut before the Iran War, a slowing Chinese economy, a ban on exports of Chinese petroleum, the big reserves held by Chinese refineries, and the huge investment of the country in electric vehicles, which do not run on petroleum, have all allowed China to avoid a big energy shock and to vastly reduce its oil imports.
Obviously, demand in China will eventually rebound at least somewhat. But with two thirds of new car sales in China now EVs, industry insiders are wondering whether gasoline vehicles are near to becoming obsolete. It was expected that sometime soon, certainly by 2030, China’s dependence on petroleum would peak and would begin declining every year thereafter. Some observers even expect this decline to begin next year.
So the big debate among China watchers is to what level demand will rebound. All the way to 11.5 million barrels a day, like last year? Or only to 9 million barrels a day? Or less? And when exactly will the country hit peak oil and its demand begin falling?
The South China Morning Post for Tuesday contained the most remarkable paragraph in this regard:
See, the huge passenger vehicle market only accounts for half of China’s petroleum demand. Diesel-fueled heavy trucks were the other half. Having 44 million EVs on the road, some 12 percent of automobiles, and having 67 percent of new car sales be EVs, obviously chips away at petroleum demand and threatens to drive it down permanently.
But if the country stops needing to use diesel for trucks, that is game over for petroleum. And, the country’s manufacturers are innovating in producing large numbers of electric heavy trucks, with Sany, BYD, XCMG, and FAW Jiefang, among others, big in this sector.
Photo by YE JUNHAO on Unsplash
Reuters reported in May that electric heavy trucks went from being a niche market only a couple of years ago to constituting about a third of new truck registrations in 2025. China has expanded the charging infrastructure for truckers, a key element in these sales, and one lacking in rival countries such as India.
In the first quarter of 2026, new energy heavy truck sales grew 45 percent year on year. The expectation is that they will be a third of new heavy trucks bought in the second quarter, given high diesel prices caused by the Netanyahu-Trump war on Iran.
A more recent Reuters report contains this amazing sentence: “EV giant CATL (300750.SZ) predicted last year that as many as half of China’s heavy truck sales could be electric models by 2028.”
The government has issued a new, ambitious plan, for the transition to heavy truck EVs, mandating that 40 percent of new heavy truck sales be EVs by 2030, but that goal may be reached substantially earlier.
The Chinese company Sany is beginning to market electric heavy trucks with a 600 mile range; so far they are mainly used for short haul trips in the Beijing megalopolis region.
So, China may never again import 11.5 million barrels of oil a day, and may already be on a downward path toward less and less petroleum use.
And while the Israeli-U.S. assault on Iran did not cause all this change by itself, it certainly turbocharged the end of oil in China. The current instability in the Gulf will only confirm the Chinese government in its plans.
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