Abstract
International conflicts cause global energy price fluctuations and supply disruptions, which can threaten energy security and economic growth in energy-importing countries, including China. However, the implications and impact mechanisms of international conflicts on the energy security and economy of oil-importing countries have been poorly explored. Using US economic sanctions on Iran as a case, a global energy-extended computable general equilibrium model, GTAP-E, is employed to assess the impacts of international conflicts on China’s energy production, trade and supply, sectoral outputs, and economic growth. The results indicate that the USA–Iran tension would threaten China’s energy security, mainly due to the instability of the energy supply and the consequent upsurge of energy prices. However, if increased oil exports from other Persian Gulf countries compensate for the global oil supply shortages, China’s energy supply would be generally assured. Moreover, because of the close energy cooperation links between Iran and China, the sanctions could decrease the Chinese outputs of non-energy sectors and economic growth. Nevertheless, compared with sole-sanction situations, the results from a possible USA–Iran tension escalation, going as far as Iran’s closure of the Hormuz Strait, could pose a more serious risk to China’s energy security and economic growth.
Highlights
Energy security in energy-importing countries is being increasingly threatened by international conflicts
In scenario 2 (S2), other Persian Gulf oil producers make full use of their spare capacity to increase oil production, compensating for the gap in the global oil supply. It has been estimated by the International Energy Agency that, in 2018, OPEC members had 3.30 million barrels/day in spare oil production capacity, of which over 70% belonged to Saudi Arabia, with the remainder belonging to Kuwait, the UAE and Iraq [86]
The results suggests that sanctions would cause China to gradually change oil import sources from Iran and other Persian Gulf countries to Sub-Saharan Africa, Russia and other MENA countries
Summary
Energy security in energy-importing countries is being increasingly threatened by international conflicts. Iran has been involved in international conflicts, such as the US economic sanctions, in the past decade, and this has posed significant threats to China’s energy security and economic growth [39]. Most studies have focused on the impacts of international conflicts on the countries targeted by the sanctions, but collateral damage to the energy security and economic growth of other stakeholders or third parties has been mostly ignored. Taking note of the shortcomings listed above and using the USA–Iran tension as an example, a global energy-extended computable general equilibrium (CGE) model, GTAP-E, is applied in this study in order to evaluate the impact of international conflict on China’s energy security and economic growth. This work contributes to the existing literature from the following three perspectives: First, the impact mechanism of international conflicts on the energy security and economic growth of energy-importing countries is comprehensively investigated.
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