The Proof of the Hormuz Pudding

Blockade and wait: the Asia-Pacific war scenarios, and why a regional war cannot be won. The West is arming for an invasion of Taiwan — the least likely option. The rational strategy is a blockade, and a blockade is won by whichever side can endure a sea-lane shutdown longest. In 2026 the Strait of Hormuz ran that experiment in the real world, and every prediction held. Two more seas have since run it: the Red Sea, and the Black Sea, where neither belligerent can protect the shipping it depends on.

1. The first indicator: China survived the 2026 sea-lane shock

The 2026 closure of the Strait of Hormuz is the test case. It was an actual sea-lane closure, not a wargame, and each party behaved as this analysis predicts.

The closure: Iran blocked the strait from 28 February 2026, following the US–Israel air war on Iran. Pre-war transit of about 3,000 vessels a month collapsed to a near-total halt — down to 191 vessels at the April low, with the strait effectively shut for much of the closure. About a fifth of world seaborne oil and a fifth of LNG normally pass through it. War-risk insurance for a transit rose from 0.125 per cent to 0.2–0.4 per cent of hull value — an increase of about a quarter of a million dollars per supertanker voyage. Analysts called it the largest oil supply disruption in history, producing shortages of refined products, especially in Asia. The war ended by negotiated agreement on 14 June 2026.

How the lane was closed matters. Iran needed no fleet to do it. It declared the strait mined and threatened any vessel that entered — mines reported by US accounts, though never independently confirmed, and no ship is recorded as having struck one. The United States then layered its own blockade on top, sealing Iranian ports from mid-April to choke Iran's oil revenue, so that for weeks the waterway was shut in both directions at once.

What firepower could not undo is the telling part. US and Israeli strikes destroyed most of Iran's navy in the opening days — US Central Command reported at least seventeen Iranian ships sunk within seventy-two hours and no Iranian warship left operating in the Gulf — and a dedicated US air campaign set out to reopen the strait. It stayed shut. That is the point: the lane was never being held by Iran's navy. It was held by missiles and drones fired from shore and small craft, and by a risk no insurer would cover — none of which a sunk fleet takes down with it. Whether a real minefield ever existed was not verified; several naval analysts judged the declaration of mines the actual weapon, since even the suspicion of them voids insurance. It made no difference either way. The Pentagon told Congress that clearing whatever was there could take up to six months, and only after the war, and a military reopening was judged infeasible. Destroying the blockader's navy did not reopen the sea lane, because the navy was not what closed it. And a strait is the easiest case there is for naval power: the smallest, most concentrable patch of water, where a fleet can mass everything in one place. If force could not reopen even that, it cannot reopen the open ocean, where it cannot concentrate at all. Naval power loses both ways — it can neither hold a contested lane open nor force a closed one back open — which leaves the sea-lane problem with no military answer.

Within that closure, China's response was the measured demonstration of who can survive a blockade:

• China's seaborne crude imports fell from about 11.39 million barrels a day (February 2026) to ~8.10 (April) to ~6.36 (May) — a near-decade low, a fall of roughly 44 per cent.
• That ~3 Mb/d reduction absorbed about 74 per cent of the total decline in global crude trade over the period, easing global prices.
• China sustained the cut on a strategic petroleum reserve estimated near 1.4 billion barrels; refinery run cuts to four-year lows; Russian and Central Asian pipeline crude; substitution into gas, NGLs and coal; and structural demand reduction (EVs at about half of new-car sales; 2024 was the first annual fall in Chinese oil demand in some twenty years). Combined stocks run to roughly 96 days of import cover.
• Australia holds about 30 days of diesel cover.

The disruption was external, partial, and lasted months. China absorbed it without rationing or shortage — and in doing so it substantially cushioned the rest of import-dependent Asia. Because China could cut roughly 3 Mb/d of demand, those barrels did not stay in the market bidding for the little oil still moving: China's cut absorbed about 74 per cent of the global decline in crude trade and helped ease prices for everyone else. Had China instead retained its pre-EV demand, that 3 Mb/d would have competed with Japan, South Korea, India and the other importers for constrained supply, driving prices higher and tightening physical availability across the region. China's capacity to cut demand acted as a relief valve for its neighbours during the shock. It was driven by self-interest, not generosity — but the benefit to the rest of Asia was real and substantial.

MMA position: this is a live readout of relative endurance, and it is the empirical basis of this memo. The scenarios that follow are modelled in wargames; Hormuz 2026 ran one version of them in the real world. China demonstrated it can ride out a sea-lane embargo. The maritime importers demonstrated the opposite.

2. Invasion is the least likely option

The Center for Strategic and International Studies' invasion wargame (The First Battle of the Next War, 24 iterations) found:

• The US, Taiwan and Japan usually defeat an amphibious invasion, but at high cost: dozens of ships, hundreds of aircraft, and tens of thousands of casualties; a large share of allied aircraft destroyed on the ground; Taiwan's economy devastated.
• China loses on the order of 10,000 troops, 138 major ships, 155 aircraft, and tens of thousands captured — losses sufficient to threaten Communist Party stability.
• The authors describe the likely US result as a pyrrhic victory.

The 2026 US Annual Threat Assessment judged that China has no fixed invasion timeline and will continue coercion short of war. Surveyed China specialists reject kinetic action by 2027 at roughly 83 per cent.

MMA position: invasion is the highest-cost, highest-risk, most-likely-to-fail option. The AUKUS submarine acquisition is structured around it.

3. Blockade is the likely option — and the counter-blockade is weakening

CSIS's blockade wargame (Lights Out?, 26 iterations; third in a series exceeding 70 iterations) found that a blockade is harder for all sides, plays out over a long and indecisive timeframe, and bears down hardest on Taiwan's energy supply (Taiwan imports about 97 per cent of its energy). The “joint blockade campaign” (联合封锁战役) is established PLA doctrine. Blockades generate escalation pressures that are difficult to contain; some iterations spiralled into general war.

A blockade does not require sinking every ship — though it can. It closes a sea lane by either of two routes that reach the same end: ships are attacked, or ships cannot obtain insurance and passage and stay in port. The two reinforce each other — a handful of attacked tankers makes the rest uninsurable — and the commercial route alone is sufficient: raise war-risk premiums and deter the shipping lines, and the route becomes unviable without a shot fired at most of the fleet. Either way, the lane closes.

And in a shooting war the kinetic route is no longer the uncertain proposition it once was. Satellite, over-the-horizon radar and drone surveillance have made the ocean surface largely transparent: a loaded tanker is a large, slow, radar-bright target that can be detected and tracked across a theatre. Long-range anti-ship missiles and drones — China's DF-21D and DF-26 among them — then hold any surface ship at risk from over a thousand kilometres away. This is not the blockade-running of the Second World War, when a darkened ship had a real chance of slipping through; a vessel that tries to run a contested lane today is found and targeted. Commercial closure and physical interdiction point the same way, and a wartime blockade of the lane should be treated as near-certain rather than as something a fleet can be relied on to keep open.

Hormuz 2026 demonstrated the commercial route directly: war-risk premiums rose sharply, transits all but stopped, and US government analysis noted that threats alone can produce “closure-like conditions” if shippers judge the cost of transit to exceed the benefit, regardless of whether every vessel is attacked. Earlier precedent: Houthi action closed much of the Red Sea to commercial traffic from late 2023 using limited means.

Naval escort does not change the picture, as the same period showed. Warships shepherding tankers cannot scale to the trade — thousands of merchant transits a month against a handful of escorts — and the exchange runs the wrong way: anti-ship missiles and drones are cheap and can be fired in saturating numbers, while the interceptors that stop them are expensive and finite, and only a few leakers need reach a tanker to sink it or keep insurers out of the trade. Through the 2023–25 Red Sea attacks a US-led coalition of more than twenty nations, with carrier groups and advanced air-defence destroyers, could not keep merchant traffic flowing: transits through the strait fell by roughly half and most major lines rerouted around the Cape of Good Hope, the warships expending multi-million-dollar interceptors against drones costing a few thousand. Hormuz 2026 made the same point at a great-power chokepoint, where traffic collapsed regardless of the naval forces present. Escort raises the cost of closing a lane; it does not reopen it.

The geography people carry in their heads is inverted, and then some. A strait was the feared stretch — narrow, minable, a place to be ambushed — and the open sea the safe one, because its vastness could hide a ship. Satellites ended that: every large vessel is now tracked from the moment it clears port — position, course and cargo logged across the theatre — so there is no longer any empty water to disappear into. The instinct now is that the narrows, being small, are where a defender can mass everything — layered air defence, electronic jamming, a wall of warships — and hold the lane open. The Red Sea has just tested that instinct and broken it: even with the defence concentrated into a single chokepoint, the lane could not be kept open to commercial traffic.

The reason is the target itself. A loaded tanker is a quarter-kilometre of slow, radar-bright steel — a flashing giant on a now-transparent ocean, impossible to hide and impossible to shield against every cheap missile and drone, which only has to leak through once. If the lane cannot be held even where the defence is densest, it cannot be held across the open sea, where no fleet can place an escort beside each of the sixty to eighty tankers a month and submarines and long-range missiles take the unguarded. The vulnerable thing is not the chokepoint or the open water; it is the tanker, tracked from port and exposed wherever it sails — which is why the lane closes.

The standard rebuttal is that China is itself vulnerable to a distant allied counter-blockade, since it imports more than 70 per cent of its oil, much of it through the Malacca Strait. Two factors are eroding that rebuttal:

• Overland supply is rising. Power of Siberia 1 (~44 bcm/yr gas) is flowing; Power of Siberia 2 (+50 bcm/yr) was agreed in September 2025; pipeline crude arrives from Russia and Central Asia. These reduce China's seaborne energy exposure progressively over a multi-year timeline. (Caveat: PoS-2 is gas, not yet flowing, and most Chinese crude is still seaborne — the shift is directional, not complete.)
• US sustainment is in question. A multi-year distant blockade is a munitions- and presence-intensive campaign far from home. After the 2026 Iran war (see §7) the US faces interceptor and munitions stockpiles drawn down by roughly half, with replenishment measured in years. Whether the US could logistically enforce a sustained counter-blockade of China while also defending allied bases is unresolved.

MMA position: the blockade requires no flawless kill chain, and the counter-blockade that is supposed to deter it is becoming harder to mount. Both propositions are now running in the real world, and the next section is the record of it.

4. Neither side can protect its shipping: the Black Sea, 2026

Hormuz and the Red Sea each tested one half of the proposition: that a lane can be closed cheaply, and that a navy cannot reopen it. The Black Sea is testing both halves at once, in both directions, between two belligerents who each have every reason to keep their own trade moving and neither of whom can.

Start with what happened to the fleet. Ukraine began the war effectively without a navy. Using anti-ship missiles and uncrewed surface drones alone it has destroyed or seriously damaged around 30 per cent of Russia’s Black Sea Fleet (Ukrainian defence ministry figures; the UK Ministry of Defence had counted at least 26 vessels by mid-2024), driven the surviving surface ships out of Sevastopol as a forward base, and then reached them again at Novorossiysk — a drone strike sank the minesweeper Valentin Pikul there on 2 March 2026, and a combined strike in April disabled the frigate Admiral Makarov, the ship serving as fleet flagship since the Moskva was sunk. A fleet cannot hold a sea open when it cannot keep itself safe in its own harbour.

Since late 2025 that campaign has been turned on commerce, and Russia has answered in kind. Ukraine has struck the tankers carrying Russian crude and fuel — about fifteen damaged or sunk in the campaign’s first months, more than forty vessels attacked in the Sea of Azov by mid-July 2026, twenty hit in a single night’s raid. Russia has struck merchant shipping in Ukrainian ports: 23 strikes on seaports and 17 attacks on civilian vessels in the first two weeks of July alone, and 28 civilian ships hit with 21 people killed between 20 June and 20 July, on Odesa regional prosecutors’ figures. On 19 July a missile hit a Guinea-Bissau-flagged ship carrying corn out of Odesa, killing nine crew from India and Syria and the Ukrainian pilot aboard.

The commercial closure followed within weeks, on both sides. War-risk premiums for a call at a Ukrainian port rose from about 0.2–0.3 per cent of hull value to around 3.5 per cent; brokers stopped quoting freight; and on 22 July the shipowners suspended arrivals altogether — Ukraine’s agriculture minister was explicit that the state had imposed no restriction, the owners had simply stopped coming. About a third of the country’s Black Sea grain export capacity is gone. On the Russian side insurers began refusing war-risk cover for voyages in the Sea of Azov, Don River grain exports have halted, wheat exports are forecast to fall by roughly a third, and Novorossiysk — which handles up to a third of Russian grain exports — has been placed under a night-time ban on vessel movements.

That is the finding, and it is symmetrical. Neither side can protect merchant shipping, and neither lacks the motive: the Azov and Novorossiysk trade is Russian revenue, and the corridor is Ukraine’s wartime economy. Russia has a navy, coastal air defence and every advantage of proximity, and cannot keep its own tankers safe in an inland sea. Ukraine has allied intelligence, a friendly shore and a corridor its survival depends on, and cannot keep an insurer in it. The sea closed to commerce in both directions under drones and missiles costing a fraction of what they destroyed — and closed against the intentions of both governments, by the decisions of shipowners neither of them commands.

The scale of it makes the lesson harder, not easier. The Black Sea is an enclosed basin a few hundred kilometres across, where every port is close to home, defences can be concentrated and a NATO member sits on the far shore. Australia’s fuel and trade cross thousands of kilometres of open ocean from the Middle East and North Asia, in ships owned, flagged and crewed elsewhere, whose owners will make exactly the decision the Black Sea carriers made — and will make it before any Australian government is consulted. Three seas have now tested the proposition in three years: Hormuz, the Red Sea and the Black Sea. In none of them did the presence of a navy keep the lane open.

MMA position: this is the proposition of the previous section, demonstrated rather than argued. A maritime war does not close one side’s shipping; it closes shipping. Neither the fleet nor the alliance decides whether the ships sail — the owners and the insurers do, and they withdraw long before a government has finished deciding what it wants.

5. The endurance asymmetry — including the export paradox

A blockade is won by whichever side can endure the disruption longest. China's resilience is structural and deliberate: pipelines (Power of Siberia 1 and 2; Central Asian crude) bypassing maritime chokepoints; petroleum reserves of roughly 96 days of cover; EVs at about half of new-car sales, high-speed rail, and the first national oil-demand decline in two decades; year-plus grain reserves and land borders with fourteen countries.

This is the product of a deliberate strategy. In November 2003 China's leader Hu Jintao named the “Malacca Dilemma” — the vulnerability of seaborne energy passing through a single strait — as a national-security problem. The two decades since produced the corrections: the China–Kazakhstan oil pipeline (2006), the Central Asia–China gas pipeline (2009), the China–Myanmar oil and gas pipelines bypassing Malacca (2013/2017), Power of Siberia 1 (2019) and 2 (agreed 2025); a strategic petroleum reserve begun in 2007; an electric-vehicle industrial policy from 2009 now supplying about half of new-car sales; and the world's largest high-speed-rail network. The maritime importers had the same twenty years. Australia used them in the opposite direction — two of its four refineries closed in 2020–21, reserves held below the IEA 90-day minimum since 2012, import dependence near 90 per cent. The asymmetry is not only structural; it is the difference between a state that identified the threat two decades ago and acted on it, and states that did not.

The maritime importers are on the other side: Japan, South Korea, and Taiwan (~97 per cent) import the bulk of their energy; Australia imports about 90 per cent of refined fuel and holds the lowest reserves in the developed world (~30-day diesel cover, below the 90-day IEA standard since 2012). New Zealand is more exposed still: it closed its only refinery in 2022 and now imports all of its refined fuel, holding only about three weeks' diesel in reserve and leaning on paper IEA stock claims held overseas.

The export paradox: a blockade or regional war also severs China's containerised manufacturing exports, damaging the world's largest goods exporter and its export-led growth model. China bleeds. The asymmetry is not that China is unharmed; it is that continental depth and centralised political control let it absorb economic pain — and suppress the domestic political feedback that constrains democracies — for longer than an import-dependent island democracy can. The contest is one of relative pain tolerance, and the structure favours China.

MMA position: a nuclear-powered submarine is a sea-control and invasion-battle asset. It does not lift a blockade of a continent and does not make an import-dependent economy able to feed and fuel itself. Australia is acquiring capability for the less likely war and remains exposed in the more likely one.

6. The flashpoints

Taiwan is the centre of gravity but not the only trigger.

• South China Sea / Philippines — assessed by some analysts as the more likely site of a first clash. The Philippines is the only US treaty ally to take casualties from China since the Korean War (Second Thomas Shoal confrontations, 2023–24). US–Philippine exercises number in the hundreds in 2026; US Typhon missiles are deployed; a Japan–Philippines defence pact took effect in September 2025.
• East China Sea / Senkaku (Japan) — friction sharpened by Japanese government statements on Taiwan.
• Pratas/Dongsha — Chinese pressure on Taiwan's outlying South China Sea positions.
• Vietnam, Korean Peninsula, China–India border — additional triggers.

MMA position: the specific spark is secondary. Any of these can produce the wider maritime conflict that closes the sea lanes the import economies depend on.

7. How Australia is drawn in — and the democratic fault-line

Australia hosts a network of US facilities:

• Pine Gap (~45 antenna domes), integrated into US surveillance, targeting and nuclear warfighting. Analyst Paul Dibb states it must be treated as a nuclear target and that “if China attacks Taiwan, Pine Gap is likely to be heavily involved.”
• North West Cape — submarine communications.
• RAAF Tindal — rebuilt with fuel and munitions storage for up to six US B-52 bombers and a wartime strike role.
• RAAF Darwin — B-52 rotations; about 2,500 US Marines.
• HMAS Stirling — Submarine Rotational Force–West from 2027 (up to four US and one UK submarines), with a wartime mission supporting operations against China.

These facilities enable US strike and intelligence operations. An adversary determines combatant status by function, not by declaration: enablement is read as participation. In the 2026 Iran war, Pine Gap supported US operations, and US facilities on Australian soil sit on the target list of any power the US fights.

The US sustainment record from that war is documented:

• Against Iran, US forces expended close to half their stockpiles of several critical munitions — including Patriot and THAAD interceptors — within the first 39 days. (More than 200 THAAD interceptors, about half the inventory; 100-plus SM-3/SM-6; 1,000-plus of some 3,100 Tomahawks.)
• At that burn rate, analysts estimated roughly half the entire interceptor inventory would be exhausted in four to five weeks. Replenishment to pre-war levels is projected at up to four years.
• A US senator briefed on the figures stated the munitions are depleted and the country is less ready for a future western-Pacific conflict with China.
• The US strategic petroleum reserve fell to its lowest level since 1983.
• Attribution note: the US president publicly claimed a “virtually unlimited” munitions supply; the documented burn-rate data above is the objective record. The “four to five weeks” the president cited referred to projected war duration, not a stockpile figure.

Two implications follow. The supplier cannot sustain a high-intensity fight far from home. More fundamentally, the help the bases invite is the wrong kind for the war that occurs: no quantity of munitions lifts a blockade or feeds a population whose fuel and food have been cut off. Military force decides battles; it does not restock a strangled economy.

Australian public opinion is divided. Lowy Institute polling finds a majority favour neutrality in a US–China war, a majority would use the navy to help break a blockade of Taiwan, and a majority oppose sending troops to resist an invasion. No recent leader of either major party has publicly argued that Taiwan is a vital Australian interest. Proponents of the current posture argue it deters war and that defending Taiwan is a strategic interest.

MMA position: a blockade-and-wait strategy is designed to exploit exactly this division. A protracted, sub-threshold squeeze paralyses public consensus and political decision-making in a democracy while the economic clock runs down. The divided polling is not a side note; it is the fault-line the strategy targets.

8. What every scenario does to Australia

The outcomes converge:

• Invasion war: Australia is a targeted forward base in a conflict that wrecks the regional economy.
• Blockade war: Australia is an import-dependent economy on the wrong side of the endurance gap, its fuel and trade choked, while the bases it hosts draw fire.
• A widening South China Sea or East China Sea war: both at once.

The military winner varies. Australia's position does not: strangled as an import economy and struck as a forward base, with economic damage arriving regardless of the result at sea. The 2026 shock was a partial preview that ended only because the strait reopened on a deal. A deliberate blockade has no comparable off-ramp.

Nor does Australia's residual refining offer a fallback. Its two remaining refineries, Geelong and Lytton, already supply under a fifth of demand and run on imported crude — so a blockade starves them of feedstock without a shot fired at them. And as large, fixed installations they are precisely the targets modern strike campaigns destroy: Ukraine, whose campaign at sea is set out in §4, put roughly a sixth of Russia's refining capacity out of action with drone and missile strikes in 2024–25, distillation units offline for weeks once hit. In a war that reaches Australia, the refineries fail twice over — cut off from the crude they run on, and exposed as fixed targets that cannot be assumed to survive.

And it does not stop at refineries. Australia's domestic gas and oil run on the same kind of target: offshore platforms standing alone at sea, and the onshore plants — Karratha, Gladstone, the Bass Strait facilities — that process what they produce. These are vast, fixed installations, and the 2026 war showed what happens to them: drones shut down a major refinery and a gas-processing plant in the Gulf in a single campaign, as a strike on Saudi Aramco's Abqaiq had in 2019. Against this, Australia has effectively no defence. Successive Defence reviews have called the absence of a layered air-and-missile-defence system one of the ADF's most serious gaps; what little is planned would cover a few northern military bases, not the platforms and processing plants the country's energy depends on. A continent's worth of fixed energy infrastructure sits in the open, within reach of cruise and ballistic missiles, with nothing overhead to stop them.

This is the lose-lose position at the centre of the policy question. Australia does not have to be the target to be hit: a regional war closes the sea lanes its fuel, food and trade depend on and severs the regional markets that are its largest — a supply-and-trade shutoff that is near-certain in every scenario, blockade or invasion alike, and that falls on Australia at the whim of a conflict it may not even be party to.

MMA position: the AUKUS submarine programme is built for none of this. It answers a naval battle, not a regional supply shutoff; it cannot make a tanker sail, lift an embargo or refill a reserve. A defence plan that leaves the most likely and most damaging contingency uncovered is, on its own terms, a plan that must be reviewed.

9. The conclusion: the war cannot be won

The central finding is consistent across every scenario: a war in the Asia-Pacific is devastating and cannot be won.

• The losses are mutual and severe. Taiwan is wrecked; Japan, Korea and the region are hit; the global economy contracts.
• Even the side that prevails at sea is left depleted — out of interceptors, drawing its oil reserve to forty-year lows, constrained to a settlement because supplies ran out.
• Only two powers endure as functioning nations: the US and China — a function of continental depth and distance from the battlefield, not of victory.
• Every other party bound to the fight, Australia first among them, is strangled, struck, and unable to be resupplied.

The right way for a nation to see itself, on this evidence, is as a castle. A blockade is a siege conducted at sea, and sieges have never been decided by the quality of the garrison’s swords. They are decided by the walls, the well, the granary and the forge — by whether the place inside can feed itself, fuel itself and repair itself while the gate stays shut, and for longer than the besieger can afford to sit outside. A castle that had to receive a convoy of grain through the enemy’s lines every fortnight was never a stronghold; it was a hostage with a moat. That is Australia’s present position: about thirty days of diesel, ninety per cent of refined fuel imported, and the convoy arriving across water no one can guarantee.

The defence path that wins a siege is therefore the unglamorous one: strong walls, full stores, and production inside them. Reserves measured in months rather than weeks; fuel refined, ammunition made, fertiliser and pharmaceuticals produced, energy generated and food and water secured here; and the industrial base to repair what breaks while the gate is shut. None of that is what a fleet buys, and no fleet substitutes for it. It is also what the whole of the 2026 record returns, from Hormuz to the Black Sea: the party that endures a closed sea is the one that stocked and built for it beforehand. China spent twenty years digging its well.

Two things follow from the same picture. A castle that garrisons someone else’s army fights someone else’s wars, and invites the siege it might otherwise have been spared. And a castle whose neighbours are its trading partners is rarely besieged at all — so the walls and the friendships are not alternatives, they are one policy. Build the walls so that a siege cannot succeed; build the friendships so that one is never laid.

The response that follows from the facts is to avoid the war and reduce the conditions that produce it — to find peace and build a united Asia. As a programme:

• Build the nation — self-reliance in fuel, energy, food and industry, so Australia can feed and power itself when sea lanes are disrupted.
• Unite the region — act as the regional connector and convener, not a frontline.
• Make friendships — trade, energy exports and diplomacy with all parties, removing the economic incentive for any power to attack Australia.
• De-escalate the bases and equipment — wind back the foreign posture that confers target status without delivering protection the supplier cannot, on the 2026 evidence, sustain.

China's 2026 conduct is the available model for resilience: reduce demand, source supply where no navy can interdict it, hold a reserve, and avoid the war. This is the basis for action, not gratitude. The MMA position is AUASIA: a self-reliant, non-aligned Australia that can endure any regional war because it is bound to none — and that works to prevent the war by building a united Asia.

References

1. China's 2026 import response — seaborne crude imports ~11.39 Mb/d (Feb) → ~8.10 (Apr) → ~6.36 (May 2026, near-decade low); the ~3 Mb/d cut absorbed ~74 per cent of the global crude-trade decline and eased prices; sustained via strategic-reserve drawdown (~1.4 bn bbl), refinery run cuts to four-year lows, Russian and Central Asian pipeline crude, gas/NGL/coal substitution and EV/rail demand reduction; stocks ~96 days of cover; the import decline “driven by economic self-interest, not generosity.” (ChemAnalyst; Discovery Alert; Energy Connects; Columbia Center on Global Energy Policy; 2026.) The closure event: Strait of Hormuz blocked by Iran from 28 February 2026 (US/Israel air war); pre-war ~3,000 vessels/month → 191 in April (~5 per cent of normal); ~20 per cent of world seaborne oil and ~20 per cent of LNG normally transit; war-risk insurance 0.125 per cent → 0.2–0.4 per cent of hull value (~+US$250k per supertanker voyage); described as the largest oil supply disruption in history; shortages of refined products, especially in Asia; war ended by memorandum of understanding on 14 June 2026, oil flows projected to ~90 per cent of pre-war by July. (Wikipedia, “2026 Strait of Hormuz crisis”; US Congressional Research Service R45281; CNN / Kpler; CNBC / Rystad; Lloyd's List Intelligence; 2026.) The closure became a two-way blockade: Iran closed the strait by declaring it mined (mines reported by US officials but not independently confirmed; no vessel recorded striking one) and by missile, drone and swarm-boat attacks on merchant ships (crew killed); the US blockaded Iranian ports from 13 April 2026 (Operation Economic Fury). US and Israeli strikes destroyed most of Iran's navy — US Central Command (Admiral Brad Cooper) reported at least 17 Iranian ships sunk by 3 March and no Iranian warship underway in the Gulf; Iran's naval commander Tangsiri was killed. The strait was still not reopened by force: the Pentagon told Congress mine-clearing could take about six months and only after the war, and analysts (Brookings; CSIS; Hudson; FPRI) judged a military reopening infeasible and the mine declaration itself the weapon. (Wikipedia, “2026 Strait of Hormuz campaign”; CRS R45281; CENTCOM; Navy Lookout; Al Jazeera; International Crisis Group; 2026.)
2. Structural demand — 2024 was the first annual Chinese oil-demand decline in about 20 years (CEPR / Bank of Italy); EVs about half of new-car sales; IEA “plateau”; Sinopec / CNPC place peak demand at ~15.4–16 Mb/d. The structural-peak thesis is contested (OilPrice, December 2025: 2025 imports up ~5.8 per cent to 11.65 Mb/d); the 2026 wartime import collapse is hard tanker-tracking (Kpler) data.
3. Invasion wargame — CSIS, The First Battle of the Next War (24 iterations): defenders usually win at heavy cost (dozens of ships, hundreds of aircraft, tens of thousands of casualties; ~90 per cent of allied aircraft lost on the ground; Taiwan's economy devastated); China loses ~10,000 troops, 138 ships, 155 aircraft, ~30,000 captured; a possible “pyrrhic victory.”
4. Intelligence picture — ODNI 2026 Annual Threat Assessment: no fixed PRC invasion timeline, continued coercion; ~83 per cent of China experts reject kinetic action by 2027.
5. Blockade wargame — CSIS, Lights Out? Wargaming a Chinese Blockade of Taiwan (26 iterations, 2025; series of 70-plus iterations): harder, longer, indecisive; targets Taiwan's energy (~97 per cent import-dependent); “joint blockade campaign” established PLA doctrine; escalation hard to contain; CSIS “does not take a position on likelihood.” Uninsurable-lane mechanism; Houthi Red Sea precedent (late 2023–). Escort/convoy limits: through the 2023–25 Red Sea attacks the US-led coalition (Operation Prosperity Guardian; 20-plus nations; carrier groups and air-defence destroyers) could not keep traffic flowing — Suez/Red Sea transits fell ~50 per cent by February 2024, most major lines rerouting via the Cape of Good Hope; cost asymmetry of ~US$2M SM-2 / ~US$4.3M SM-6 interceptors against ~US$2k–20k drones, US$1bn-plus of Red Sea intercepts by March 2025. (IMF PortWatch; Atlantic Council; Operation Prosperity Guardian records; 2024–25.)
6. The Black Sea, 2026 (§4) — Ukraine entered the war effectively without a navy and, by early 2026, had destroyed or seriously damaged about 30 per cent of Russia’s Black Sea Fleet on Ukrainian defence ministry figures (the UK Ministry of Defence assessed at least 26 vessels damaged or destroyed by June 2024, with the surviving surface fleet withdrawn east from Sevastopol to Novorossiysk); strikes reached Novorossiysk itself — the minesweeper Valentin Pikul sunk 2 March 2026, the frigate Admiral Makarov (fleet flagship after the Moskva) critically damaged in April 2026. The campaign against commerce: about 14–15 Russian tankers damaged or sunk since late 2025 (Naval News); more than 40 vessels attacked in the Sea of Azov by mid-July 2026; 20 vessels struck in a single overnight raid, mid-July. Russian strikes on Ukrainian shipping: 23 strikes on seaports and 17 attacks on civilian vessels in the first two weeks of July 2026; 28 civilian vessels struck and 21 people killed 20 June–20 July (Odesa regional prosecutors); a Guinea-Bissau-flagged corn carrier struck off Odesa on 19 July 2026, killing nine crew (India and Syria) and a Ukrainian maritime pilot. Commercial effect: Ukrainian-port war-risk premiums ~0.2–0.3 per cent to ~3.5 per cent of hull value; brokers ceasing to quote freight; shipowners suspending arrivals from 22 July 2026 with no state restriction imposed; about a third of Black Sea grain export capacity lost. Russian effect: war-risk cover refused for Sea of Azov voyages, Don River grain exports halted, wheat exports forecast down by about a third, night-time vessel-movement ban at Novorossiysk (up to a third of Russian grain exports). (Reuters; Naval News; Al Jazeera; Insurance Journal; Ifchor Galbraiths; UkrAgroConsult; Ambrey; Moscow Times; UK Ministry of Defence; 2024–2026.)
7. Counter-blockade and pipelines — China imports more than 70 per cent of its oil, much via Malacca; Power of Siberia 1 (~44 bcm/yr) flowing, Power of Siberia 2 (+50 bcm/yr) agreed September 2025, plus Central Asian crude, progressively reducing seaborne exposure (PoS-2 gas, not yet flowing; most crude still seaborne). US sustainment constraint per the US-sustainment entry below.
8. Endurance and export paradox — China resilience (pipelines, ~96-day reserves, EVs about half of sales, high-speed rail, year-plus grain, fourteen land borders) versus maritime importers Japan, Korea, Taiwan (~97 per cent) and Australia (~90 per cent refined fuel, ~30-day cover). Deliberate over two decades: “Malacca Dilemma” named 2003; China–Kazakhstan oil pipeline (2006); Central Asia–China gas pipeline (2009); China–Myanmar oil/gas pipelines (2013/2017); Power of Siberia 1 (2019) and 2 (agreed 2025); strategic reserve begun 2007; NEV policy from 2009; world's largest high-speed-rail network. Australia over the same period: two of four refineries closed 2020–21, reserves below the IEA 90-day minimum since 2012, ~90 per cent import dependence. New Zealand closed its only refinery (Marsden Point) in 2022, now wholly reliant on imported refined fuel; minimum onshore stockholding from January 2025 ~21 days diesel / 24 jet / 28 petrol, plus IEA 'oil tickets' (paper claims held offshore) (MBIE; Newsroom; 2025–26). China is the world's largest goods exporter; a blockade or war severs containerised exports and damages its growth model — mutual harm, with continental depth and centralised political control conferring higher and longer pain tolerance than an import-dependent democracy.
9. Flashpoints — South China Sea / Philippines (likely first clash; only US treaty ally to take China casualties since Korea; Second Thomas Shoal 2023–24; hundreds of US–Philippine exercises in 2026; US Typhon; Japan–Philippines pact September 2025); Senkaku / Japan; Pratas / Dongsha; Vietnam; Korea; China–India.
10. US sustainment — 2026 Iran war: about half of several key munition stockpiles (Patriot / THAAD interceptors; 200-plus THAAD, about half the inventory; 100-plus SM-3/SM-6; 1,000-plus of some 3,100 Tomahawks) expended in the first ~39 days; about half the entire interceptor inventory in four to five weeks at the burn rate; replenishment up to four years (Defense Secretary: “months and years”). A US senator (briefed): munitions depleted, the US less ready for a western-Pacific fight with China. The US strategic petroleum reserve fell to its lowest since 1983. The US president publicly claimed a “virtually unlimited” supply (Truth Social, 2 March 2026) — the burn-rate data is the objective record; the “four to five weeks” cited was projected war duration. (CSIS; Washington Post; Al Jazeera; National Security Journal; Military Times; 2026.)
11. Australia's facilities — Pine Gap (~45 antenna domes; US targeting and nuclear warfighting; Paul Dibb: a nuclear target, and “if China attacks Taiwan, Pine Gap is likely to be heavily involved”); North West Cape; RAAF Tindal (up to six US B-52s, wartime strike); RAAF Darwin (B-52s, ~2,500 Marines); HMAS Stirling (Submarine Rotational Force–West from 2027, up to four US and one UK submarines, wartime mission). “Enablement reads as participation” (Defence Connect, 2026); the 2026 Iran war as live demonstration.
12. Public opinion and coercion design — Lowy Institute: a majority favour neutrality in a US–China war; a majority would use the navy to help break a Taiwan blockade; a majority oppose troops to resist an invasion; no recent leader argues Taiwan is a vital Australian interest. Proponents' counter-case: deterrence value; strategic interest in defending Taiwan. Protracted sub-threshold coercion is designed to fracture democratic political consensus while economic pressure accumulates.
13. Australia's air-and-missile-defence gap (§8) — the 2023 Defence Strategic Review identified the lack of a layered integrated air and missile defence (IAMD) system as one of the ADF's most serious capability gaps; ground-based air defence remains limited to NASAMS (short/medium-range, two batteries), with medium-range GBAD and long-range interceptors still future acquisitions and the IAMD effort focused on northern bases rather than dispersed civilian infrastructure (2024/2026 National Defence Strategy; ASPI Strategist; United States Studies Centre). Energy-facility strikes: in the 2026 Hormuz war drones disabled the ADNOC Ruwais refinery (~922k b/d) and a Saudi Aramco processing plant (~550k b/d); the September 2019 drone and missile attack on Saudi Aramco's Abqaiq–Khurais removed ~5.7 Mb/d. (Quwa; ASPI; CRS; 2019–2026.)

China is treated here as a strategic actor; the memo takes no position on the morality of any party, only on what each scenario does to Australia. Companion memos: Memo 31 (the diagnosis); the forthcoming Self-Reliant Nation and Sovereign Fuel (self-reliance); the forthcoming Neutral Uniter (armed neutrality and the connector role); and the AUASIA programme page (the realignment).