Trump's 'Four-Week War' Against Iran, China's Oil Supply, and Summits Prompt Inflation

Trump's 'Four-Week War' Against Iran, China's Oil Supply, and Summits Prompt Inflation

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The Trump administration has repeatedly attacked China's oil suppliers, Venezuela and Iran, demonstrating a strategy of undermining socialism by triggering inflation after a four-week war and then a US-China summit.

Four weeks before a tentative agreement was due to be reached for a summit with China, US President Trump, who attacked Iran, declared a "four-week war of aggression" and has not specified a date for the summit.

On the 3rd, at a meeting with the Democratic Party and the government, the Lee Jae-myung administration announced a plan to "quickly implement a market stabilization program worth over 100 trillion won if necessary," including a 100 trillion won currency supply. President Lee also announced a "$300 million AI fund investment" in Singapore on the 2nd.

Last July, President Lee agreed to a $650 billion US investment at the South Korea-US summit and announced the creation of a 150 trillion won AI fund as a national project.

Inflationary pressures from the war have been concentrated in China, Japan, South Korea, Taiwan, and India, which receive more than half of the Middle East's oil supply, as the Middle East faces the greatest threat from a US preemptive strike and an Iranian counterattack.

The Strait of Hormuz, a narrow maritime passage on Iran's southern border, carries one-fifth of the world's oil supply, a significant portion of which is supplied to Asian countries.

Reuters reported on the 2nd that “for China, the risk of a US military operation in Iran is both real and symbolic.” “As the world’s largest buyer of Iranian oil, China sourced 13.4% of its total oil from China last year through seaborne imports, making it uniquely exposed to supply disruptions if a conflict unfolds, particularly if the Strait of Hormuz, the world’s most crucial oil export route, is blocked.”

Reuters continued, “While China could diversify its imports, the loss of Iranian oil could put significant price pressure on China in the short term, analysts say, narrowing the margins of the manufacturing base on which the Chinese economy relies so heavily,” the report said. “A US attack on Iran serves as a reminder to Beijing and its allies that the US military can strike not only in its own backyard but also around the world.”

The New York Times reported on the 2nd, "While Asian countries possess oil and gas reserves sufficient to last weeks and months, a prolonged war in the region or Iran's decision to block the Strait of Hormuz would pose a more serious threat to their economies." Experts warned that while Iran is unlikely to block the waterway because of its reliance on China for oil and gas exports, the impact would be devastating to the global economy.

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Immediately after the war broke out, oil prices soared in the market, tankers avoided the region and took longer routes, insurance premiums began to rise, and ports began to experience congestion.

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"Oil produced in the Middle East is crucial to China's overall energy security," said Muyou Xu, a Singapore-based senior oil analyst at market research firm Kpler. "If the conflict were to prolong, China would lack the ability to cushion the blow. This would be disastrous not only for China but also for the global market," he told the NYT.

The Chinese economy is already facing a domestic slowdown as the real estate crisis places a heavy burden on households that have invested their savings in real estate. Excessive competition among local companies has triggered a vicious cycle of deflation, and youth unemployment is high.

To support economic growth amid the Trump administration's tariff imposition, China imposed US tariffs on Chinese goods, once reaching 145% in domestic manufacturing. Four weeks later, while President Xi Jinping was "scheduled to meet" with President Trump, the Iranian war broke out.

China imports more than half of its seaborne crude oil from the Middle East, with about a quarter of that coming from Iran. A decline in Iranian supply would ultimately force China to purchase more oil from other sources, at higher prices.

According to market research firm Kpler, oil reserves in China, South Korea, and Japan are roughly estimated. According to Kpler, China has 115 days' worth of crude oil on land and operates three major crude oil pipelines, two of which transport oil from Russia and Kazakhstan, providing a safeguard against turmoil in the Middle East.

China is pouring billions of dollars into developing renewable energy sources like solar power and electric vehicles, but as the Middle East war escalates from a short-term energy supply to a medium- to long-term crisis, it will need to find new sources of oil supply.

Han Lin, country director of consulting firm Asia Group, said of the Chinese economy, "China cannot quickly shift to domestic demand to offset the collapse of export margins and simultaneously absorb the shock to oil prices. The US trade war is squeezing the interests of Chinese industries that need to support the green energy transition to reduce their exposure to the Middle East."

South Korea and Japan are more vulnerable to turmoil in the Strait of Hormuz because they rely heavily on Middle Eastern oil and gas and have limited domestic energy production.

The New York Times reported, "Japan imports more than 90% of its oil through the strait, and South Korea relies on the Middle East for about 70% of its crude oil imports." It added, "Japanese shipping giant Mitsui OSK Line, one of the world's largest fuel carriers, announced it was suspending operations in the Persian Gulf following reports that the Iranian military had warned ships to avoid the strait."

According to Japanese government data, Japan holds a combined 254 days of private and state-owned oil reserves.

The New York Times reported, "South Korea had enough reserves to cover more than 210 days of consumption as of the end of last year, according to data from its state-owned oil and gas company." "South Korea has begun reviewing contingency plans, including releasing oil reserves, in the event of a prolonged closure of the Strait of Hormuz, according to local media."

A "four-weeks' notice war" in the Middle East is likely to inflict significant economic damage, as supply pressures relative to reserves lead to continued surges in energy prices.

The New York Times stated, "Japan and South Korea already spend over $100 billion annually on energy imports, so further price increases will worsen their trade balances."

The Times also highlighted the worsening "debt economy," stating, "Japan, in particular, is struggling with long-term inflation that is straining household budgets, and government moves to ease consumer burdens through cash handouts and tax cuts could worsen Japan's massive sovereign debt and further destabilize debt markets."

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Asia's wartime inflation has exposed the most obvious vulnerability in Taiwan, a country focused on semiconductors, due to its dependence on imported fuel.

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The Times stated, "Taiwan imports more than 96% of its energy, most of which comes from the Middle East. About 60% of Taiwan's oil and about a third of its natural gas arrive by ship from countries via the Strait of Hormuz."

An energy shortage in Taiwan could jeopardize the global economy, a manufacturing powerhouse that relies on the production of semiconductors used in smartphones, electric vehicles, and artificial intelligence systems. Taiwan's small number of factories produce the majority of the world's advanced computer chips, and its economy relies on a stable power supply.

Taiwan's largest oil supplier is Saudi Arabia, and Qatar supplies a quarter of its liquefied natural gas.

Chen Shih-hau, director of energy security at the Taiwan Economic Research Institute, a private research institute, said, "Taiwan has enough oil to supply power for about 120 days," adding, "Taiwan's natural gas supply will only last about 11 days."

Taiwan's semiconductor manufacturers have backup generators designed to maintain power in short-term emergencies, but these are not a long-term replacement for the national power grid.

Taiwan's Ministry of Economic Affairs announced in a statement on the 2nd that it has developed a long-term contingency plan to ensure a stable power supply. Until the Trump administration, India's primary oil supply had been Russia, but as part of a trade deal signed with President Trump last month, India was to replace Russian oil supplies with other crudes, primarily from the Persian Gulf.

Reuters reported on the 2nd that "the U.S. military operation in Iran has put Chinese President Xi Jinping in a vulnerable position ahead of the summit," adding that "it is the second time in as many months that Trump has deployed U.S. troops against one of Beijing's close partners." Trump said he plans to arrive in Beijing in late March, following the US arrest of Venezuelan President Nicolas Maduro in a dangerous airstrike in Caracas in January and the death of Iranian Supreme Leader Ayatollah Ali Khamenei in a US-Israeli airstrike on July 28th. Both countries are major oil suppliers to China.

Trump said the operation against Iran could last about four weeks, which he said would coincide with his visit to China.

Reuters reported that the White House disclosed the date of Trump's visit to China as preparations for the Iran attack were underway, and a source familiar with US-China discussions said the White House was still waiting for a formal invitation from Chinese officials.

Reuters reported that the White House is "expecting a limited Chinese response" in a war with Iran and that the US is "betting that the Iran operation will not trigger a Chinese military response at this time."

A US official told Reuters that China "does not expect material support for Iran during the US operation." “The US focus on the Middle East will embolden Beijing in the Indo-Pacific region in the short term,” he said.

The US official continued, “A key concern for the US is that a rapid depletion of its ammunition stockpile could weaken its ‘medium-term deterrence’ against China’s threat of military action against Taiwan.”

If Trump’s planned ‘four-week war’ expands, the US could run out of ammunition, giving China a strategic advantage.

Reporting that analysts cited China’s limitations in countering the US military’s global influence, the report said, “China is likely to step back and let the US shoulder the burden of Middle East turmoil, reinforcing Beijing’s narrative that Washington is reckless and destabilizing.”

Jia Daojiong, an energy security expert at Peking University in China, told Reuters that Chinese officials will feel no obligation to support Iran and will counter the “purely rhetorical construct” of a Western alliance with Iran. “The direct parties to the conflict will have to act on their own.” He said, "You have to stand and sleep in that spot."

See <Lee Jae-myung's Concealment of Military Buildup: 'Coexistence and Co-Prosperity'; Chung Dong-young's 'North Korea-US Summit Prioritized'; Breaking the Socialist Economy, December 19, 2025>

<Economic Cold War: Capitalist Powers' 'Panic'; Socialist 'Regime Breaking'; Ukraine Confrontation, February 25, 2022>

<Trump's 'China Recession Collapse' Cycle Misjudged; Xi Jinping 'Accelerates Confrontation, Cracks Down on Allies,' May 11, 2025>

<Cracking the Socialist Economy's Backbone by Making the System Compete Through Military Pressure, August 9, 2019>

<President Moon calls for "joint prosperity," while North Korean leader Kim Jong-un calls for "double standards for military buildup," October 5, 2021>

<Inter-Korean confrontation: "Freedom and democracy for the North Korean people" will crush the socialist economy, July 24, 2022>