By: Shatha Kalel
Economic relations between the United States and China have been growing increasingly tense for years, particularly in technology, energy, and trade. In the latest escalation, Washington imposed sanctions on the Rizhao Shihua crude oil terminal in China, a key facility that handles about 9% of China’s oil imports. The decision has sparked global concern, as it could force major refineries—most notably Sinopec—to cut production by up to 250,000 barrels per day, delivering a major blow to the energy sector in the world’s second-largest economy.
Reasons for the Sanctions
The U.S. sanctions aim to restrict oil trade between China and Iran, as Washington accuses Beijing of purchasing Iranian oil at discounted prices, helping Tehran circumvent American restrictions. Targeting the Rizhao terminal is not just an economic move but also a political escalation, striking at the core of China’s energy infrastructure and extending beyond prior actions that mainly targeted smaller, independent refineries known as “teapots.”
Economic Impact on China
Decline in refinery production:
Reduced operations at Sinopec and other refineries could temporarily limit domestic supplies of refined products like gasoline and diesel, raising local prices.
Supply chain disruptions:
Many tankers have rerouted to alternative ports such as Caofeidian in Hebei province, increasing transport and storage costs and lowering logistical efficiency.
Short-term demand impact:
Analysts from Energy Aspects expect the disruption to be temporary, as China redirects shipments to other ports, though short-term market volatility and operational costs will rise.
Impact on GDP:
A slowdown in industrial production linked to energy could affect China’s economic growth, as refining remains vital to industrial value chains.
Global Economic Implications
Oil prices: The sanctions have intensified uncertainty in global oil markets, driving prices higher amid fears of reduced Chinese imports.
Trade route realignment: The rerouting of tankers could reshape global energy trade routes, especially between Asia, Latin America, and the Middle East.
Deepening global economic divide: The sanctions reinforce economic “decoupling” between Beijing and Washington, prompting China to diversify partners and develop alternative financial systems to reduce Western dependency.
Impact on Arab Economies
The ripple effects of the sanctions extend to Arab economies—both oil exporters and importers:
Oil price fluctuations: Higher global oil prices boost revenues for exporters such as Saudi Arabia, Iraq, and the UAE, but raise energy costs for importers like Egypt, Jordan, and Morocco.
Shifts in Chinese demand: Reduced access to some ports may lead China to increase imports from Arab producers, especially in the Gulf, strengthening trade ties.
Investment opportunities: China may expand its investments in Arab oil infrastructure to secure stable supplies, benefiting joint projects in Saudi Arabia, the UAE, and Iraq.
Regional stability risks: Prolonged global oil instability can strain the budgets of Arab states reliant on oil revenues, heightening vulnerability to economic shocks.
In short, Arab economies face dual effects: temporary gains from higher oil revenues but challenges from price volatility and higher import costs in non-oil nations.
Economic Analysis and Conclusion
From a macroeconomic perspective, these sanctions test China’s resilience. While short-term effects may be limited, long-term outcomes could include partial restructuring of the energy sector, more investment in renewables, and reduced dependence on politically unstable oil sources.
Ultimately, the U.S. sanctions on Rizhao mark a new phase in the Washington-Beijing economic confrontation, aiming to weaken China’s energy influence. Although China can adapt, the crisis exposes the risks of heavy reliance on imported oil. For Arab economies, the sanctions bring both opportunities and vulnerabilities—highlighting the need for diversification and sustainable energy strategies to maintain stability amid global political and market fluctuations.
Economic Studies Unit / North America Office
Al-Rabetat Center for Research and Strategic Studies