Energy as an Instrument of Containment in U.S.–China Competition: Limits of Effectiveness and Prospects for Transformation

Strategic Assessment by Nabhan Khreisheh – Progress Center for Policies

Introduction

The competition between the United States and China has entered a sustained phase that extends beyond episodic trade or technological disputes. It increasingly reflects a structural contest over the rules and balance of the international order in the coming decades. This rivalry is not confined to tariffs or artificial intelligence; it is grounded in hard and structural power—foremost among them energy, the essential backbone of industrial output, military capability, and technological advancement.

China is currently the world’s largest importer of crude oil, with average imports reaching approximately 11.1 million barrels per day in 2024. More than 70 percent of its oil consumption is covered by external sources. A significant portion of these supplies transits strategically sensitive maritime chokepoints—most notably the Strait of Hormuz, through which roughly 20 percent of globally traded seaborne oil passes, and the Strait of Malacca, a primary artery for East Asian imports.

The United States retains global naval superiority, an extensive alliance network, and substantial influence over the international financial system, alongside a demonstrated capacity to deploy economic sanctions as an extraterritorial instrument of coercion. Although Washington has not formally articulated an explicit “energy strangulation” strategy against China, the intersection of sanctions on major energy producers, reinforced military presence along vital sea lanes, and the restructuring of global supply chains suggests that Chinese energy security has become an embedded variable in the broader strategic competition.

This assessment proceeds from the premise that energy is no longer merely an economic dimension of rivalry. Rather, it has evolved into a structural lever of pressure that can be employed to slow China’s ascent and recalibrate the terms of competition without crossing the threshold into direct military confrontation. However, the effectiveness of this lever is bounded by structural constraints rooted in global economic interdependence and China’s adaptive capacity.

Analysis

China’s energy import profile reflects a high degree of external dependence. Beijing sources the majority of its crude oil from the Arabian Gulf, alongside Russia, while also drawing supplies from Iran and Venezuela. This heavy reliance on maritime routes renders strategic chokepoints central to Chinese national security calculations. The Strait of Hormuz represents a critical vulnerability in the event of instability in the Gulf, while the Strait of Malacca remains the principal transit route for Chinese imports from the Middle East and Africa.

In recent years, U.S. policy has systematically employed sanctions against Iran and Venezuela—both major energy producers and important Chinese partners. In Iran’s case, the reimposition of sanctions in 2018 led to a sharp decline in oil exports relative to pre-sanctions levels, followed by partial recovery through indirect channels, though financial and logistical constraints persisted. In Venezuela—holder of the world’s largest proven oil reserves, exceeding 300 billion barrels—sanctions and their secondary effects significantly reduced production and export capacity compared to pre-2015 levels, limiting its reliability as a long-term supplier.

These measures do not completely sever China’s energy inflows; rather, they increase transaction costs and heighten political risk. Maritime insurance premiums, financial transfer constraints, and sanction-evasion mechanisms add layers of uncertainty and vulnerability. The strategy therefore operates less as outright interdiction and more as the sustained production of structural uncertainty within China’s energy supply chain.

Beyond sanctions, U.S. naval dominance constitutes a central element of the equation. American naval forces maintain a continuous presence across the Gulf, the Indian Ocean, and the Western Pacific through an extensive network of bases and alliances. This posture provides deterrent leverage in times of crisis and renders key maritime corridors potential pressure points. While any large-scale disruption of global energy flows would entail significant worldwide economic costs—including for the United States and its allies—the capacity to influence maritime security remains a strategic contingency tool in high-escalation scenarios.

Yet this leverage faces clear structural constraints:

Deep global interdependence: Major disruptions in energy flows would generate systemic economic repercussions affecting advanced economies across the board, including the United States.

Chinese adaptation and diversification: China has taken concrete steps to reduce exposure by expanding overland pipelines with Russia and Central Asia, strengthening strategic petroleum reserves, accelerating investment in renewable energy, and expanding naval capabilities to safeguard sea lines of communication.

These initiatives do not eliminate maritime dependence but gradually narrow the scope of U.S. leverage. Furthermore, as the global energy transition advances, the relative strategic significance of oil chokepoints may diminish over time, shifting competition toward critical minerals, battery supply chains, and clean technology ecosystems.

Strategic Outlook

The United States can deploy energy as an instrument of partial containment, but it cannot transform it into a decisive tool without risking broader escalation. Calibrated pressure may slow China’s rise and constrain certain strategic options, yet it cannot prevent continued Chinese economic and technological expansion. Conversely, excessive reliance on energy leverage could accelerate Chinese efforts at strategic decoupling or prompt more assertive measures to secure long-term energy autonomy.

Conclusions

Energy constitutes a meaningful leverage point for the United States, but not a mechanism capable of enforcing comprehensive containment. Washington retains a realistic opportunity to preserve maritime superiority and employ sanctions in ways that keep elements of Chinese energy security exposed to U.S. influence, thereby shaping the tempo of competition in the coming decade.

The likelihood of achieving full containment that prevents China from emerging as a peer competitor remains limited. China’s economic scale, adaptive capacity, and accelerated investment in alternative energy and technological systems progressively erode the sustainability of long-term containment. Partial containment appears feasible in the near term but is likely to diminish as structural alternatives mature.

Energy provides the United States with a strategic window to consolidate alliances and reinforce its competitive position, but it does not guarantee enduring unipolar dominance. The most probable trajectory is a managed yet persistent rivalry characterized by reciprocal pressure, with gradual movement toward a more multipolar international order rather than a restoration of uncontested American primacy or an inevitable slide into direct military confrontation.

Energy remains a critical variable in managing this competition, but it will not by itself determine its ultimate outcome. The future international order will depend on both powers’ capacity to balance pressure, deterrence, and adaptation within a rapidly evolving global environment.