After the closure of Hormuz, how did Brazil become China’s oil savior at the expense of Iraq?
After the closure of Hormuz, how did Brazil become China’s oil savior at the expense of Iraq?
2026-06-25
Shafaq News – Baghdad
The “Iraq Future” Foundation for Economic Studies and Consultations confirmed on Thursday that what happened in the Strait of Hormuz during the month of March, as a result of the escalation of tensions in the region, was not just a passing logistical disruption, but a complete reshaping of the map of oil suppliers to the largest importer in the world.
Comparing China’s imports for the period (March–May 2026) with those of the previous year reveals a striking paradox: the value of China’s imports rose by 7.8% while the quantity fell by 16%—because it was the price that jumped, not the demand. But behind this overall trend, suppliers were divided into big winners and big losers, with Iraq leading the pack.
Iraq: The biggest loser by far
According to the report issued by the organization, the value of Iraq’s oil exports to China fell by 75%, and the volume by 73%, with the daily average plummeting from approximately 1.3 million barrels to just 363,000 barrels. This collapse was not accidental, but rather a direct result of an export structure that relies almost entirely on the southern ports of Basra on the Gulf.
The report quoted its head, economist Manar al-Obeidi, as saying: “When the strait was closed, Iraq found itself besieged: tankers were unable to leave, and its storage facilities were full, forcing it to reduce pumping at the Rumaila oil field due to a lack of storage capacity. The only land-based alternative—the Kirkuk-Ceyhan pipeline to Turkey with a capacity of 1.6 million barrels per day—was already shut down and only resumed operation at an initial capacity of no more than 250,000 barrels. This is the true cost of having such a fragile single outlet.”
Saudi Arabia: Survival thanks to decades of preparation
On the other side, Saudi Arabia avoided Iraq’s fate. While its exports to China declined by about 14%, their value increased by 15%, and the country did not experience a collapse. The secret is not luck, but a four-decade-old contingency plan: the 1,200-km-long Petroline (East-West) pipeline, stretching from the eastern oil fields to the port of Yanbu on the Red Sea, completely bypassing the Strait of Hormuz.
Aramco activated the plan within hours of the crisis beginning, increasing the pipeline’s capacity to 7 million barrels per day and redirecting tanker fleets toward Yanbu. Iraq and Saudi Arabia faced the same test—but one of them had built its exit strategy twenty years earlier.
Iran: Exporting through the shadows
Al-Ubaidi noted that despite the sanctions and the war, Iran did not cease its operations. Instead, it disappeared from official figures only to reappear under other guises: Indonesian exports to China jumped more than 16-fold—and Indonesia is already a net importer of oil—a clear indication that Iranian crude was being relabeled with an alternative origin. Add to that the Jask outlet on the Sea of Oman, bypassing the Strait of Hormuz, and the preferential prices that attract independent Chinese refineries. Thus, Tehran continued to flow from countless sources.
Brazil: From the margins to third place
The report indicated that Brazil was the biggest winner. The value of its exports to China more than doubled (+113%), propelling it to third place as the largest supplier of crude oil to China—both in value and daily volume (approximately 1.26 million barrels per day)—just behind Russia and Saudi Arabia. March 2026 marked the largest month of Brazilian exports to China in history.
She noted that this rise was not a sudden occurrence. Brazil was already primed: surplus production, a geographic location outside the Strait of Hormuz making it a low-risk supplier, and established Chinese investments in its oil sector for over a decade. When China sought a reliable supplier outside the turbulent Middle East, Brazil was the ready answer. Today, China absorbs approximately 57% of Brazil’s total oil exports.
Atlantic Africa: Seizing the Opportunity
According to the report, the same advantage—distance from the Strait of Hormuz—boosted African Atlantic suppliers. South Sudan’s exports jumped more than sixfold, Chad’s tripled, Libya’s 150%, and Nigeria’s 95%. Crude oil that bypassed the closed strait became a safe alternative to the disrupted Gulf oil, and shipments from the Atlantic basin headed toward the “East of Suez” markets, which were hungry for supplies.
strategic lesson
Al-Ubaidi concluded the report by saying that this crisis reveals a harsh rule: in times of turmoil, it is not the largest producer that wins, but rather the one with the most flexible export outlets. Saudi Arabia survived because it had an alternative route, Brazil rose because it was far from the chokepoint, and Iran persevered through parallel routes—while Iraq paid the price for its near-total dependence on a single outlet.
shafaq.com
