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The following impact report is part of Global Guardian's 2024 Taiwan Shock Index. To explore and download the map, click here.

Sector Snapshot: Energy

Sectors Impacted Upstream: Hydrocarbons, coal

Sectors Impacted Downstream: Electrical, metallurgy, chemicals, consumer goods, clothing and textiles, construction, food processing, automotive, manufacturing

A Taiwan Strait Crisis would prompt a massive energy shock in the short term and would irrevocably alter the energy market. Seabourne imports from the Middle East to China, Japan, and South Korea — three of the five top global energy importers — constitute over half of the total global oil trade. The sea lanes through which the energy is transported would be contested in the event of a conflict.

Short-Term Impact: Moderately Adverse

  • A Taiwan Strait Crisis would prompt an unprecedented global energy shock.
    • Major international crises trigger energy price shocks as the geopolitical instability and uncertainty of the situation are factored into the market. 
  • Seabourne energy delivery to East Asia, and China specifically would be disrupted.
    • China, Japan, and South Korea are three of the world’s top five oil importers, constituting around half of the global oil trade. These nations are also major importers of LNG and coal.
    • Delivery of Middle Eastern oil and gas in the midst of a conflict at sea would be complicated, even if price shocks and sanctions are left out of the equation. If China engages in a blockade of Taiwan, shipping oil to China, Taiwan, Japan, South Korea, and even the Philippines through the affected area may prove uninsurable to the point of non-profitability.

Medium to Long-Term Impact: Nuetral

  • A military conflict in the Taiwan Strait could irrevocably alter global energy markets.
    • Western sanctions and the United States’ naval control over the Malacca Strait could disrupt China's oil imports. China will likely need to rely on Russia to secure its energy supply.
    • With China replacing Europe’s demand for Russian oil and gas and Russia replacing the Middle East’s supply of oil and gas for China, China and Russia could form a de-facto regional energy market with different market dynamics and little external oversight.
    • The existence of a parallel oil market with different prices would create an extremely lucrative space for smuggling and arbitrage.
  • Depending on how long a conflict lasts, insurance costs for transporting oil to East Asia from the Middle East could rise precipitously. Taking a more circuitous route that avoids the Strait would also increase transportation costs.
  • Should the Taiwan Strait remain uninsurable, North American (and Australian) energy exports to Japan and South Korea could become more attractive.


Businesses that could be directly or indirectly impacted by a Taiwan Strait Crisis should walk through the “what-if,” and explore the various scenarios — including the worst-case — that could arise. Now is the time for organizing tabletop exercises with key stakeholders and established vendors across the organization.

It's essential to develop business continuity plans ahead of time to bolster operational resilience, as well as emergency response plans. Having a robust plan in place that has been effectively communicated to your workforce will ensure your organization is able to pivot and dampen the impacts of what could be the next major geopolitical shock. 

Standing by to Support

Global Guardian is actively supporting global businesses with business resiliency assessments, contingency and emergency response planning, and tabletop exercises. To learn more, complete the form below to contact Global Guardian's 24/7 Operations Center or call us directly at +1 (703) 566-9463.

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