China Will Use The Energy Shortage To Capture Taiwan
Taiwan brings in 97% of their energy from tankers, most of which is LNG and oil.
This makes the island nation incredibly vulnerable in normal times. But these are not normal times. Much of the world's oil and LNG are blocked in an odd doubler blockade in the Strait of Hormuz. Iran uses their drones and missiles to limit oil from being shipped from Saudi Arabia, Qater, Kuwait and other Gulf nations. The US Navy is limiting Iranian tankers from shipping oil.
There are estimates that the Persian Gulf is shipping around 10% to 40% of its traditional daily production of 20 million barrels. This is a massive loss and this lost contribution to the world's energy mix has been going on since February 28, 2026.
More recently, in early September the world lost another major shipping corridor of oil which is the Red Sea. The Houthis in Yemen have been quickly conquering large patches of the country in the last month. This new land capture, combined with the East West Pipeline in Saudi Arabia being struck, limits another roughly four million barrels of oil.
The Ukraine War has also created another recent chokepoint for oil and LNG refining. The Ukrainians have developed longer range drones that have been hitting many Russian refineries. In return, the Russians have shut down trade in the Black Sea, striking ships and ports in Ukraine.
When you combine all these attacks and blockades of energy, it sets up a bad situation for the Ring of Fire nations in the Pacific. Countries like Japan, South Korea, Singapore, Australia, and Taiwan are highly dependent on imports of fossil fuels, both oil and liquid natural gas.
We have a very simple supply problem here. If 10 people want to put gasoline into their car but there is only enough gas for nine people - then there is a scarcity problem.
Right now this issue is not in the news because up to this point the problem has been one of price. Copmanies, governments and individuals have all been displeased with the pricing increases for fossil fuel outputs, like diesel, gasoline, jet fuel. But there is a moment approaching that will be a much more severe difficulty.
The time is coming somewhere in October or November, or it could be December or January, but the problem is coming. And that problem is when the scarcity problem becomes a shortage problem, where there is not enough LNG or oil to ship to all the customers who want to buy those fossil fuels.
This gets us to Taiwan. There's been a lot of rumors about China someday conducting a military blockade, or a policing quarantine, or some mixture of both, that would essentially strangle the nation by making the lights go out. Taiwan maintains about 10 to 15 days of reserve LNG and about 90 to 150 days of reserve for oil. These are both pretty short supplies, no doubt the analysts in China have noticed and calculated these reserve energy reserves better than anyone.
What makes this moment more dangerous for Taiwan is the following: Should China choose a moment where dozens of nations are trying to outbid one another for what LNG and oil supplies are available, this would be an already fraught time for the world to stop and care that there was a conflict between China and Taiwan.
While on the surface nations like Japan and South Korea would protest or maybe threaten to take action against China, it makes you wonder if behind the scenes they might be thinking something like 'well, it's not good that China has blockaded Taiwan but all those tankers full of LNG and oil that Taiwan was buying are now available for our country to buy' - and this is an incredibly cynical way of thinking, even childish in some sense. But the leaders of nations are often self-centered, they do often have a Simple Simon function. We see simple and short-term thinking quite often throughout history by leaders who seek the most simplistic outcome.
There are other factors that would contribute to this situation. The Europeans are preoccupied with Russia and have pushed money and material into the Ukraine War on a massive scale. The United States is distracted with Iran, the Gulf nations on edge, and the Middle East in general. The Philippines, Japan and South Korea do not have the military to fight with China, they know they would not last more than 48 hours in the fight against the far superior naval and air power that China has amassed. Africa and South America do not have the concern, inclination or capabilities to help Taiwan if they were quarantined.
The world already has a number of problems and when the fossil fuel shortages begin to arrive most of these countries are going to be focused domestically, on how to manage their energy mix. If you're the leadership in France, Australia or Malaysia, the concern will be with keeping the local economy going and keeping gas at the pumps. The concern will not be that a sovereign nation (that has a somewhat breakaway status) next to China is being surrounded and cutoff from energy and food - it will instead be: how can I keep my own problems from costing me my political scalp locally with this fuel shortage.
This problem could become more dynamic. China has a huge reserve of oil and LNG, and China has demonstrated they can conserve oil in a manner unlike other nations with economic controls, and the power of their citizens. If China tells their factories to go dark on Fridays, so they will. If China tells their commuters to work from home remotely, it's done. If China tells everyone to turn out the lights and go to be at 8pm, probably half the population will do it. China also has a lot of electrification from hydro, solar, wind and nuclear power it can draw from, more than any other nation.
So China, despite their massive population and huge industrial operations, could whether the energy shortage better than most. And this could lead to a strange situation for the countries that do feel the need to take action against China, they might be bribed with oil and LNG offerings. Japan comes to mind in this scenario. If we wake-up some day in November and Taiwan has hundreds of Chinese Maritime Militia boats and another 100 China Coast Guard ships forming a cauldron around Taiwan, there will be nations that are outraged. One of those countries would be Japan, and they would make threats, activate all their naval ships, begin to act as if they were going to war. But they will most likely be facing that potential fuel shortage as the same moment.
It's a bit hard to go to war when you don't have a lot of diesel or jet fuel, for the ships and airplanes.
China in that moment could come with the bribe. They could offer Japan 200 days of emergency supplies of diesel, gas, fuel for ships and planes. This will give the leaders of Japan pause. They might reason something like...
"The thing is we weren't going to win the fight with China anyway, if everything devolved into a shooting war. And we are projected to run out of diesel in the next 35 days, which is a really big problem in that it's diesel fuel that moves all the food and products to the stores. Guess we will have to go with that fuel deal from China, even though we can't stand their ugly aggression."
The basic question comes down to a couple basic questions:
1) Will any nation fight the massive power that is China, to try to preserve Taiwan's independence? This is most likely a "No" answer just in general. Despite all the tough talk, when the moment comes nobody has the strength of arms to even make a run at China with their modern navy, modern air force, sophisticated drone and missile complex, plus they have 500 ICBMs at the end of the day.
2) Will any nation fight the massive power that is China, to preserve Taiwan independence, during a worldwide fuel shortage that threatens to bring destabilization to many nations? It feels like this will be a resounding "NO" as now there are just too many problems at hand to worry about what becomes of Taiwan. And besides going to war requires having a lot of fuel for ships, jets, transports, etc. So a bit ironic, yet another reason not to get into a fight, when you are unable to maintain that fight.
It would seem that October 2026 through the first half of 2027 will be a time to keep an eye on China, their navy, their civilian maritime vessels, their movements along the Chinese shoreline. If you were President Xi and the world was on the edge of entering into a fuel shortage, and all the potential trouble and chaos that could follow, it would seem a truly interesting time to look at Taiwan. We know that Xi has said he wants to reestablish and reunify Taiwan as part of China before his life ends and his is 73 years old.
Ironic that the talking point for the last few years in Washington was that China would attack (or initiate a blockade) around Taiwan in 2027. The attack on Iran by Israel and the US set in motion the leadership of Iran to close the Strait of Hormuz, and a fallout of that fight invigorated the Yemen Civil War to restart, which essentially caused the closing of the Red Sea. These two events will create fuel shortages around the world. And that fuel shortage could create the strategic moment for China to pull the trigger on a blockade. And that blockade could create more fossil fuel availability to other nations that will be working hard to bid on energy, so they'll probably hold their nose and look the other way while Taiwan sits alone, surrounded and running out of energy (and food) with a maximum 150 day window until the lights are out.
China is very methodical, perhaps they will continue on with the slow pressure techniques that they've been using the last five years. But on a purely strategic basis, it would seem like a massive opportunity for China, and a dangerous moment for Taiwan (and The West) to enter into an energy shortage in this part of the world.