Commentary & Analysis

Introduction

Saudi Arabia and China have long developed their energy relationship based on crude oil trade. However, the conflict involving Iran since late February 2026 has highlighted the strategic importance of this partnership by exposing the vulnerability of energy supply routes through the Strait of Hormuz. Even amid this crisis, Saudi Arabia has sought to maintain stable crude oil supplies to China by utilizing its East-West Pipeline, which bypasses the strait and provides an alternative export route via the Red Sea. The conflict has reinforced the value of Saudi Arabia as a reliable energy supplier to China while underscoring the importance of resilient supply chains during periods of geopolitical instability.

At the same time, the bilateral energy relationship is no longer confined to the oil sector. As Saudi Arabia faces rising electricity demand and the challenge of decarbonization, China’s renewable energy and battery storage technologies are playing an increasingly important role in expanding the Kingdom’s supply of clean electricity and supporting the decarbonization of its power sector. These developments demonstrate that Saudi Arabia-China energy cooperation has evolved from a relationship centered primarily on crude oil trade into a broader strategic partnership encompassing both conventional and clean energy.

This article analyzes Saudi Arabia-China energy relations in the context of the Iran conflict, examining how the partnership has been shaped by both energy security concerns and expanding cooperation in renewable energy.

Section 1 provides an overview of Saudi Arabia–China energy relations based on crude oil trade prior to the Iran conflict. Section 2 examines how the Iran conflict has reshaped bilateral energy relations, focusing on Saudi Arabia’s ability to maintain crude oil supplies to China despite the disruption of the Strait of Hormuz. Section 3 analyzes the challenges posed by Saudi Arabia’s rising electricity demand and the reasons behind its promotion of clean energy policies. Section 4 focuses on the role of Chinese companies in the development of Saudi Arabia’s renewable energy sector. Finally, the conclusion considers the future prospects for Saudi Arabia–China energy cooperation.

1. Saudi Arabia-China Relations through Crude Oil Trade

Saudi Arabia and China have long strengthened their energy relationship through crude oil trade. According to the U.S. Energy Information Administration (EIA), Saudi Arabia exported 23 percent of its total crude oil exports to China in 2023, compared with 14 percent to Japan, 13 percent to South Korea, and 10 percent to India. This demonstrates that China is Saudi Arabia’s largest crude oil market, absorbing nearly one-quarter of its total crude oil exports.

Saudi Arabia has also sought to secure long-term outlets for its crude oil by investing in Chinese refining and petrochemical projects. A key example is Aramco’s acquisition of a 10 percent stake in Rongsheng Petrochemical, completed in July 2023. The agreement includes a long-term arrangement to supply 480,000 barrels per day (b/d) of crude oil to Zhejiang Petroleum and Chemical Co. Ltd. (ZPC), a Rongsheng affiliate. Similarly, the HAPCO project in Panjin, Liaoning Province, announced in March 2023, is expected to receive up to 210,000 b/d of crude oil feedstock from Aramco.

In addition, construction began in November 2024 on a large-scale refining and petrochemical complex in Gulei, Fujian Province, marking another major milestone in the deepening downstream cooperation between Aramco and Sinopec in China.

These projects should not be viewed merely as downstream investments. Rather, they form part of Saudi Arabia’s broader strategy to link its crude oil exports with China’s growing refining and petrochemical demand.

As electric vehicles become more widespread, demand growth for transportation fuels in China is expected to slow, whereas demand for petrochemical products is likely to continue expanding. Against this backdrop, Saudi investment in refining and petrochemical facilities have become increasingly important, as naphtha and liquefied petroleum gas (LPG), both produced during the refining process, are essential feedstocks for petrochemical production.

From China’s perspective, Saudi Arabia is also a strategically important crude oil supplier. In 2025, China imported 14 percent of its total crude oil from Saudi Arabia, making Saudi Arabia it’s second-largest supplier after Russia, which accounted for 18 percent. Among Gulf producers, Saudi Arabia also surpassed Iraq (11 percent), the United Arab Emirates (UAE) (7 percent), Oman (6 percent), and Kuwait (3 percent), underscoring its central role in China’s procurement of Middle Eastern crude oil.

The importance of Saudi crude extends beyond its large share of China’s imports. Saudi Arabia possesses substantial production capacity, well-developed export infrastructure, and a supply system supported by long-term contracts. These factors make it one of China’s most reliable suppliers, helping to reduce procurement risks.

While Russian and Iranian crude may offer price advantages, both are subject to sanctions-related and geopolitical risks. According to Reuters (10 April 2025), China purchases around 90 percent of Iran’s oil exports, much of which is transhipped through waters off Malaysia and Singapore and subsequently rebranded as Malaysian crude. By contrast, Saudi crude provides Chinese refineries with a more stable, transparent, and reliable source of supply.

Thus, the Saudi Arabia–China energy relationship has become increasingly interdependent, centered on the stable supply of crude oil and the securing of long-term demand. Saudi Arabia is therefore likely to continue prioritizing the maintenance and expansion of its presence in the Chinese market.

2. Saudi Crude Oil Supplies to China amid the Strait of Hormuz Crisis

The sudden deterioration of security conditions in Iran and the wider Gulf region in late February 2026 raised serious concerns about the stability of crude oil supplies from the Gulf to China. Iranian threats against commercial vessels, combined with the suspension of marine insurance coverage for ships transiting the region, prompted shipping companies, tanker operators, and commodity traders to avoid the Strait of Hormuz. Consequently, this critical corridor for crude oil and liquefied natural gas (LNG) became effectively impassable to normal commercial traffic.

According to IMF PortWatch, the number of vessels transiting the strait fell sharply from 95 on 27 February to just 17 on 1 March and subsequently remained generally below ten per day.

The scale of the disruption was particularly significant because the Strait of Hormuz is the principal export route for crude oil and petroleum products from Saudi Arabia, Iraq, the UAE, Iran, Kuwait, Qatar, Bahrain, and the Saudi–Kuwaiti Neutral Zone. The International Energy Agency (IEA) estimates that approximately 14.94 million barrels per day (b/d) of crude oil—around 34 percent of globally traded crude—and a further 4.92 million b/d of petroleum products passed through the strait in 2025, with the vast majority destined for Asian markets. The crisis constrained not only Gulf export capacity but also upstream production.

Although producers can temporarily redirect crude oil into domestic storage, storage capacity is inherently limited. Once facilities approach capacity, production must be curtailed. OPEC statistics indicate that between February and April 2026, Saudi crude oil production declined from 10.11 million to 6.87 million b/d. Over the same period, Iraqi production fell from 4.14 million to 1.49 million b/d, UAE production from 3.39 million to 2.02 million b/d, and Kuwaiti production from 2.58 million to just 560,000 b/d.

These reductions demonstrate that production capacity alone cannot guarantee supply security. Even countries with abundant reserves cannot sustain output if they are unable to transport their crude to international markets. For major Asian importers such as China, the crisis therefore reinforced the strategic importance of reliable supply routes, diversified sources, and export infrastructure capable of bypassing vulnerable maritime chokepoints.

In this respect, Saudi Arabia occupies a comparatively resilient position. Despite the severe regional disruption, the Kingdom continued supplying crude oil to China through its East–West Pipeline, which bypasses the Strait of Hormuz.

The approximately 1,200-kilometre pipeline connects the Abqaiq oil-processing hub in eastern Saudi Arabia with the Red Sea port of Yanbu and has an estimated transport capacity of 5–7 million b/d. By redirecting additional crude through this route, Saudi Arabia substantially increased shipments from Yanbu to Asian markets. According to vessel-tracking data compiled by Bloomberg, exports from Yanbu rose from approximately 700,000 b/d on 5 March to 3.4 million b/d on 17 March, reaching 4.1 million b/d by 20 March.

Saudi Arabia consequently strengthened its position in China’s crude oil imports relative to other Gulf suppliers during the first half of 2026. Chinese imports of Saudi crude increased from approximately 40 million barrels in January to 47 million barrels in February.

Despite the outbreak of the conflict involving Iran, imports remained comparatively resilient at around 42 million barrels in March, 38 million barrels in April, and 41 million barrels in May.

By contrast, China’s imports from other Gulf suppliers—including the UAE, Iraq, Kuwait, and Qatar—declined sharply from the spring of 2026 as their export capacity remained constrained by the disruption of traffic through the Strait of Hormuz. Imports of Iranian crude, much of which had reportedly been transhipped through Malaysia, also fell to approximately 11 million barrels in May following the imposition of the United States naval blockade in April.

Saudi Arabia’s ability to maintain comparatively stable supplies during the crisis demonstrates the strategic value of the East–West Pipeline and Yanbu export terminals. It also distinguishes the Kingdom from Gulf producers whose exports remain more heavily dependent on the Strait of Hormuz. Saudi Arabia’s large production base established long-term supply relationships, and access to alternative export infrastructure have therefore strengthened its position as China’s most reliable Gulf crude oil supplier during periods of geopolitical disruption.

While deeper Saudi–China energy cooperation can reduce China’s exposure to maritime chokepoints, it cannot eliminate it. Shipments from Yanbu bypass the Strait of Hormuz but remain dependent on the security of the Bab el-Mandeb Strait and the wider Indian Ocean sea lanes.

The East–West route therefore represents a reconfiguration of maritime risk rather than its complete removal. Saudi Arabia should consequently be understood not merely as a major source of crude oil, but as a comparatively resilient energy partner within China’s broader supply-diversification strategy. Its strategic value lies in the combination of production capacity, supply reliability, and alternative export routes—advantages that became particularly visible during the 2026 Strait of Hormuz crisis.

3. Saudi Arabia’s Electricity Challenges and Clean Energy Policy

Outside of the hydrocarbon sector, renewable energy has become an important area of Saudi Arabia-China energy relations. Since the adoption of the Paris Agreement in 2015, the global push for decarbonization has accelerated, prompting Saudi Arabia and other Gulf oil producers to reduce greenhouse gas emissions. At the same time, declining fossil fuel demand could undermine oil and gas revenues, their main source of fiscal income. Nevertheless, Saudi Arabia has promoted clean energy sources, particularly solar and wind power.

Saudi Arabia is expanding the use of clean energy as part of its decarbonization policy and as a response to rapidly rising electricity demand. Like other Gulf oil-producing countries, Saudi Arabia faces the challenge of meeting this growing demand while reducing greenhouse gas emissions. Its electricity generation increased significantly from 191 terawatt-hours (TWh) in 2005 to 471 TWh in 2025, with an average annual growth rate of 3 percent over the past decade, according to the UK-based Energy Institute.

This increase has been driven by population growth, economic expansion, repeated heatwaves that have raised demand for air conditioning, and the full operation of seawater desalination plants. Looking ahead, the growth of the artificial intelligence (AI) sector and the expansion of data centers are expected to place further pressure on electricity demand.

While new power plants are urgently needed to meet rising electricity demand, Saudi Arabia is also under pressure to reduce greenhouse gas emissions. In this context, Saudi Arabia has turned to solar and wind power, which do not directly emit carbon dioxide (CO₂) during power generation. The country’s renewable energy policy gained momentum after the launch of Saudi Vision 2030 in 2016, which set an initial target of 9.5 GW for renewable energy capacity. The targets were later raised through initiatives such as the National Renewable Energy Program (NREP). In 2019, Saudi Arabia announced more ambitious targets of 27.3 GW by 2023 and 58.7 GW by 2030.

State-led renewable energy projects are advancing in Saudi Arabia, with ACWA Power playing a central role. Established in 2004, the company expanded by taking advantage of opportunities created by the restructuring of the domestic power and water sectors. Its track record attracted the Public Investment Fund (PIF), which first invested in ACWA Power through its wholly owned subsidiary, Sanabil Direct Investments Company, in 2013. The PIF later increased its ownership to 50 percent in 2020.

Several solar and wind power projects have come online in Saudi Arabia since 2019. According to Saudi Arabia’s General Authority for Statistics, ten renewable energy projects were operational by the end of 2024, with a combined capacity of 6,551 MW. These projects include the Sakaka Solar PV, the Dumat Al Jandal Wind, the Sudair Solar PV, the Jeddah Solar PV, the Rabigh Solar PV, the Ar Rass Solar PV, the Saad Solar PV, and the Shuaibah Solar PV.

Saudi Arabia is also accelerating the expansion of its renewable energy capacity. According to the Saudi Green Initiative, by the end of 2025, 12.3 GW of renewable energy capacity had been connected to the grid. King Abdullah Petroleum Studies and Research Center (KAPSARC) data further indicate that Saudi Arabia plans to implement 38 solar and wind power projects between 2026 and 2029, with a combined capacity of 51 GW. If completed as planned, these projects would raise the country’s installed renewable energy capacity to around 63 GW by 2029.

The expansion of solar and wind power has contributed to the diversification of Saudi Arabia’s power mix. In 2025, electricity generation from renewable energy reached 19.8 TWh, accounting for 4.2 percent of total power generation. At the same time, the share of oil-fired power generation declined from 41 percent in 2017 to 32 percent in 2025. Although renewables still accounted for a limited share of the power mix, they helped reduce Saudi Arabia’s dependence on oil-fired power generation.

In Saudi Arabia, electricity demand rises sharply in summer due to increased cooling needs. During this period, large volumes of crude and fuel oil are used for power generation. Reuters reported that Saudi Arabia’s consumption of oil-fired power generation could exceed 1 million b/d during peak summer electricity demand. Expanding renewable energy and gas-fired power generation is therefore important for reducing the country’s reliance on oil-fired power generation in summer.

If Saudi Arabia can reduce the amount of oil consumed for power generation, it can free up more crude for export. Power mix diversification is therefore important not only for decarbonization, but also for securing export capacity and maintaining oil revenues.

Although Saudi Arabia has advanced the construction of solar and wind power plants, solar power is usually available only during the day, and its output is difficult to adjust. It can help meet daytime cooling demand when electricity consumption peaks, but it is less suited to meet round-the-clock demand from sectors such as AI, gaming, and e-sports. Wind power is also affected by changes in wind conditions. As a result, renewable energy can create instability in electricity supply to the grid, depending on the time of day and weather conditions.

In this context, battery energy storage systems (BESS) are important. By storing clean electricity generated from renewable power, BESS can help provide stable power supply over a 24-hour period, including at night. Saudi Arabia plans to introduce 48 GWh of BESS capacity by 2030.

4. China’s Presence in Saudi Arabia’s Renewable Energy Sector

China has played an important role in supporting the development of Saudi Arabia’s renewable energy sector. It has established a strong position in global renewable energy and electric vehicle (EV) industries while strengthening its control over the associated supply chains through investments in critical minerals. Several key minerals required for renewable energy technologies and EV batteries, including cobalt, nickel, and copper, are either produced only in limited quantities in China or are insufficient to meet domestic demand.

To address this constraint, Chinese companies have invested extensively in overseas mining projects in countries such as the Democratic Republic of the Congo, Indonesia, Zambia, and Chile, securing long-term access to strategically important mineral resources.

According to BloombergNEF’s Energy Transition Supply Chains 2025 (28 April 2025), China accounts for more than 70 percent of global manufacturing capacity across major clean-energy industries, including solar PV, wind equipment, lithium-ion batteries, and electric vehicles, although hydrogen electrolyzers remain an exception.

China has combined this overseas mineral acquisition strategy with its strengths in refining and processing critical minerals, reinforcing global supply chains centered on China. According to the International Energy Agency (IEA), China accounted for 91 percent of global graphite processing, 77 percent of cobalt processing, 65 percent of lithium processing, 44 percent of copper processing and 28 percent of nickel processing in 2023. China has also successfully industrialized downstream clean-energy manufacturing.

As a result, its production capacity for solar PV, wind power equipment, lithium-ion batteries for EVs, and hydrogen-related components exceeds roughly 70 percent of global capacity in each sector. China’s manufacturing scale and cost competitiveness have further strengthened its position in the global renewable energy market.

By combining economies of scale with integrated supply chains, Chinese companies have consistently reduced project costs and outperformed many Western competitors in international tenders. In Saudi Arabia, Chinese firms have frequently secured engineering, procurement, and construction (EPC) contracts for renewable energy projects. Major Chinese EPC contractors include SEPCO III, a subsidiary of Power Construction Corporation of China (POWERCHINA), China Energy Engineering Corporation (CEEC), and Shanghai Electric. These companies are responsible for constructing large-scale solar and wind power plants, supporting Saudi Arabia’s renewable energy expansion at the implementation stage.

Chinese companies are also playing an increasingly important role in the battery storage sector. BYD Company Limited (BYD) has signed a contract with the Saudi Electricity Company to supply large-scale battery energy storage systems (BESS). These systems are expected to improve grid stability, facilitate the integration of intermittent renewable energy sources, and enhance the balance between electricity supply and demand. As Saudi Arabia expands renewable electricity generation, battery storage will become an increasingly important component of a resilient and flexible power system.

Beyond battery storage, another emerging area of Saudi-China cooperation is digital infrastructure, particularly data centers. Under Vision 2030, Saudi Arabia is investing heavily in artificial intelligence (AI), cloud computing, and digital services, with the ambition of becoming a leading regional digital hub.

However, AI-enabled data centers consume enormous amounts of electricity, not only for computing but also for cooling systems that maintain stable operating conditions. As demand for AI services continues to grow, ensuring a reliable, affordable, and low-carbon electricity supply has become a strategic priority. China has developed significant strengths across the data-center value chain, including servers, power distribution systems, battery backup technologies, cooling equipment, and other electrical infrastructure.

Chinese companies are therefore well positioned to support Saudi Arabia’s digital infrastructure while integrating renewable electricity and battery storage into data-center operations. At the same time, advanced cooling technologies, AI-based energy management systems, high-efficiency power electronics, and the co-location of data centers with renewable energy projects can significantly reduce electricity consumption and improve overall energy efficiency.

This illustrates how renewable energy, battery storage, and digital infrastructure are becoming increasingly interconnected within Saudi Arabia’s energy transition.

Chinese companies also play an important role in Saudi Arabia’s solar power supply chain, particularly in PV modules, solar trackers, and inverters. In the module segment, LONGi, Yingli Solar, JinkoSolar, and Trinasolar supply high-capacity solar panels. In the tracker segment, Arctech, ESET Solar, and Trinasolar provide systems that enable solar panels to follow the sun and maximise electricity generation under harsh desert conditions. In the inverter segment, Huawei Technologies, Sungrow, and Sineng Electric supply equipment that converts solar-generated electricity into gridcompatible power.

Overall, the participation of Chinese companies has helped Saudi Arabia reduce the cost of deploying solar power and battery storage, improve project efficiency, and accelerate project implementation. Beyond renewable energy generation, Chinese technologies are also expected to support the Kingdom’s rapidly expanding digital infrastructure, particularly energy-intensive AI and cloud-computing data centers. In the long term, these developments could contribute to lower electricity generation costs, greater grid reliability, and a more sustainable power system capable of supporting both industrial development and digital transformation.

Taken together, these developments indicate that Saudi-China energy cooperation has expanded well beyond crude oil trade to encompass renewable energy, battery storage, digital infrastructure, and broader clean-energy supply chains.

It is also important to note that the role of Chinese companies extends beyond Saudi Arabia itself. They have established a strong presence in overseas renewable energy projects led by Saudi Arabia’s ACWA Power. For example, among the ten renewable energy projects currently operated by ACWA Power in Central Asia, seven have awarded EPC contracts to Chinese companies, including CEEC and Huadong Engineering Corporation, a subsidiary of POWERCHINA. These projects include the Azerbaijan Wind Project in Azerbaijan, together with six projects in Uzbekistan: the Tashkent Riverside Solar Project, Kungrad Wind Project, Karatau Wind Project, Dzhankeldy Wind Project, Birinchi Wind Project, and Bash Wind Project.

This pattern highlights a complementary division of responsibilities: Saudi companies typically lead projects as developers and investors, while Chinese companies play a central role in engineering, construction, and the supply of key technologies and equipment. More broadly, it suggests that Saudi-China cooperation in clean energy has evolved beyond a bilateral partnership into a collaborative model that is increasingly shaping renewable energy development in third-country markets.

Conclusion

The future of Saudi Arabia–China energy cooperation is likely to rest on two mutually reinforcing pillars: crude oil security and clean-energy development. Crude oil will remain the foundation of the relationship. China requires stable, large-scale supplies of Saudi crude, while Saudi Arabia continues to regard China as one of its most important long-term export markets.

The Strait of Hormuz crisis has reinforced Saudi Arabia’s strategic importance to China and distinguished the Kingdom from other Gulf exporters. By redirecting crude oil through the East–West Pipeline to the Red Sea port of Yanbu, Saudi Arabia demonstrated its ability to maintain exports when normal commercial traffic through the Strait of Hormuz was severely disrupted. Its combination of substantial production capacity and alternative export infrastructure gives it a comparative advantage over Gulf suppliers whose exports remain more heavily dependent on the strait.

This route does not eliminate China’s exposure to maritime chokepoints. Although it reduces dependence on the Strait of Hormuz, cargoes departing from Yanbu remain exposed to the Bab el-Mandeb Strait and the wider Indian Ocean sea lanes. The East– West route therefore diversifies and redistributes maritime risk rather than removes it. Nevertheless, Saudi Arabia’s production capacity, long-term supply relationships and comparatively resilient export system significantly increase its strategic value to China.

At the same time, bilateral cooperation is expanding into renewable energy, battery storage, electricity infrastructure, and smart-grid technologies. Chinese companies are well positioned to support Saudi Arabia’s efforts to reduce domestic oil consumption in the power sector and meet rising electricity demand from industrial development, artificial intelligence, cloud computing, and data centers. Clean-energy cooperation will therefore develop alongside, rather than replace, the traditional oil relationship.

The crisis has also demonstrated that energy security is inseparable from regional stability, secure sea lanes, critical-infrastructure protection, and resilient supply chains. Bilateral cooperation may consequently broaden beyond commercial projects to include strategic dialogue on maritime security, regional crisis management, and the resilience of international energy supplies.

The Strait of Hormuz crisis may therefore mark a turning point in Saudi Arabia–China relations, accelerating its evolution from a predominantly commercial energy partnership into a more comprehensive strategic relationship encompassing oil-supply security, route diversification, clean-energy development, and regional stability. Saudi Arabia’s importance to China increasingly lies not only in the volume of crude oil it can produce, but also in its ability to deliver that oil through a comparatively resilient export system.

Noriko Suzuki Visiting Professor, Graduate School of International Public Policy (OSIPP), Osaka University; Non-Resident Senior Researcher, Gulf Research Center (GRC)

Masahide Takahashi Guest Research Fellow, The Institute of Islamic Area Studies at Sophia University