Hormuz Crisis Forces China’s Energy Pivot to North Africa

The 95% collapse in vessel traffic through the Strait of Hormuz since late February has transformed China’s North African energy strategy from long-term infrastructure investment into immediate supply chain necessity. With ship transits plummeting from 130 per day in February to just 6 in March following US-Israeli strikes on Iran, Beijing is accelerating partnerships with Algeria and Morocco to bypass a chokepoint that historically carried 40-50% of its seaborne oil imports.

The strategic realignment extends beyond crude oil diversification. China’s $15+ billion bet on Morocco’s battery manufacturing capacity—anchored by facilities already operational as of June 2025—positions North Africa as a critical node in electric vehicle supply chains at precisely the moment when Persian Gulf routes face sustained disruption. UNCTAD data confirms Brent crude has climbed above $90 per barrel by mid-April, up from $69-74 in June 2025, while LNG spot prices at Ras Laffan hit three-year highs of $25.40/MMBtu on 4 March.

Algeria: Declining Output, Rising Strategic Value

Algeria produced 973,000 barrels per day as of February 2026, down from 1.41 million b/d in 2023, according to CEIC Data. Despite this decline, the country remains Africa’s second-largest liquid fuels producer and a geographically proximate alternative to Gulf supplies. Natural gas output fell 7% to 98.3 billion cubic meters in 2024, yet China is deepening commitments: Sinopec signed a refinery expansion deal in November 2025 adding 738,000 tons per year of heavy naphtha processing capacity, with completion targeted within 30 months.

Algeria’s 2026 licensing round offers 24 onshore blocks as part of a $60 billion investment programme spanning 2025-2029, per Discovery Alert. Previous bidders included TotalEnergies and Eni alongside Sinopec. The infrastructure push comes as Europe seeks non-Russian gas alternatives, creating competition for Chinese capital—but Beijing’s willingness to finance upstream development where Western majors hesitate gives it leverage.

Morocco’s Battery Hub: Operational Capacity Ahead of European Competition

Morocco’s emergence as Africa’s primary lithium battery manufacturing center predates the Hormuz crisis but gains urgency in its wake. CNGR’s $2 billion battery precursor facility commenced full operations in June 2025, the first Chinese battery project operational on the continent, according to South China Morning Post. Gotion High-Tech’s $6.8 billion Kenitra gigafactory targets 20 GWh initial production by late 2026, scaling to 100 GWh total capacity—enough to support over 1 million electric vehicles annually.

The strategic logic extends beyond production volume. Morocco holds 50 billion tons of phosphate reserves representing 73% of global supply, critical for lithium iron phosphate (LFP) battery cathodes. Electrification Solutions reports a 36% cost advantage for lithium battery production in Morocco versus competitor countries, while proximity to European markets allows Chinese manufacturers to circumvent tariffs. By 2030, batteries are projected to comprise 60% of Morocco’s total car exports, with supply chain export value reaching €40 billion ($44 billion).

Sebastian Wolf, chief operating officer of Volkswagen’s battery unit, acknowledged the strategic disadvantage: “Right now, we have to be honest that the set-up of LFP supply chain is happening in Morocco and not in Europe.” The comment underscores how China’s North African industrial base solves multiple problems simultaneously—tariff exposure, supply chain resilience, and access to raw materials—while European competitors debate policy frameworks.

Belt and Road Recast as Crisis Response Infrastructure

The Hormuz closure accelerates a transformation already underway. Egypt secured an $18 billion early-2026 agreement for Norwegian-Chinese partnerships on photovoltaic expansion, wind farms, and local manufacturing bases, per Stimson Center analysis. Morocco signed a $6.2 million hydrogen production deal on 6 April with Jiangsu GuofuHee Energy for a 20 MW system. These projects align with China’s 15th Five-Year Plan (2026-2030) prioritizing green hydrogen, long-term storage, and smart grids as energy resilience pillars.

Dr. Chuchu Zhang, associate professor at Fudan University’s School of International Relations, framed the shift: “As disruptions in the Gulf expose the fragility of China’s oil lifelines, Beijing is turning to North Africa not just for backup supplies, but for a fundamentally different energy future.” The Dallas Federal Reserve models the closure removing 20% of global oil supplies and raising WTI to $98 per barrel while cutting global real GDP growth by an annualized 2.9 percentage points in Q2 2026—economic pain that makes diversification politically imperative.

OPEC Dynamics and US-China Competition

Algeria exported 402,000 b/d of crude in 2024, down from a 532,000 b/d average over 2015-2024, with Europe receiving most shipments, according to the Energy Information Administration. China’s deepening ties create a wedge in traditional OPEC-Europe supply relationships. If Algeria prioritizes Chinese buyers willing to finance upstream infrastructure, European refiners face tighter supply amid their own Russian gas replacement efforts—a dynamic that could push Brent higher even if Hormuz partially reopens.

The battery dimension introduces a separate competitive vector. Morocco’s manufacturing capacity allows China to serve US and European EV markets while technically complying with local content requirements under frameworks like the Inflation Reduction Act. US policymakers face a dilemma: blocking Moroccan battery imports risks alienating a strategic partner in North Africa, yet allowing them undermines domestic manufacturing incentives. NAI 500 notes the Gotion investment specifically targets compliance with European market access rules, suggesting China has gamed out regulatory arbitrage scenarios.

What to Watch

Track Gotion’s late-2026 production ramp in Morocco—any delays signal execution risk in China’s offshore battery strategy. Monitor Algeria’s licensing round outcomes: if Chinese firms win multiple blocks while Western majors sit out, it confirms a long-term realignment of North African energy partnerships. Watch for European policy responses to Moroccan battery imports, particularly whether Brussels attempts to tighten origin rules that could disqualify Chinese-manufactured cells. Finally, Hormuz transit data remains the wildcard—partial reopening could ease immediate crude pressure but won’t reverse the strategic diversification logic now embedded in Beijing’s planning. Aysha Chowdhry of The Asia Group notes China may “accelerate diversification strategies—deepening ties with Russia, Central Asia and potentially African producers” regardless of Gulf conditions, suggesting the pivot outlasts the immediate crisis.