THE IRAN WAR & STRAIT OF HORMUZ CRISIS

Russia, China, and the Reshaping of Global Maritime Order

Situational Briefing — 18 March 2026

Prepared by Dr. Mohd Hanif Mohd Ramli

1. Executive Summary

On 28 February 2026, the United States and Israel launched joint military strikes against Iran, killing Supreme Leader Ali Khamenei in the opening wave. Iran retaliated with missile and drone attacks targeting US bases, Israeli territory, and multiple Gulf states. The Islamic Revolutionary Guard Corps (IRGC) subsequently imposed an effective blockade on the Strait of Hormuz, through which approximately 20% of the world’s oil transits daily.

As of 18 March 2026 — Day 18 of the conflict — the war has expanded to include Israeli ground operations in Lebanon, sustained attacks on UAE energy infrastructure, and the systematic elimination of Iran’s senior leadership. The Strait of Hormuz remains effectively closed to Western-aligned shipping, with 21 confirmed attacks on merchant vessels. Brent crude has surged above $102/barrel, up approximately 40% since the war began.

Russia and China, while avoiding direct military confrontation, are playing decisive behind-the-scenes roles: Russia through real-time intelligence sharing and satellite support, and China through technology transfers, radar systems, and the emerging use of yuan-denominated oil trade as a mechanism for strait passage.

2. Conflict Timeline

3. Russia and China: The Invisible War

3.1 Russia — The Intelligence Backbone

Russia’s contribution to Iran’s war effort extends far beyond the Maritime Security Belt 2026 naval exercises conducted in mid-February. According to three senior US officials cited by The Washington Post, Moscow has been providing Tehran with the precise locations of US warships and aircraft operating across the Middle East.

The intelligence pipeline operates through Russia’s advanced satellite surveillance network, including the Kanopus-V satellite — re-designated “Khayyam” upon transfer to Iranian operational control — which provides round-the-clock optical and radar imagery. Iran’s own reconnaissance satellite constellation is insufficient for tracking fast-moving naval assets; Russia effectively serves as the nervous system of Iran’s precision-strike doctrine.

Key takeaway: Russia is not risking its own naval assets in the Gulf. Instead, it is fighting what analysts describe as “a war of signals” — providing the targeting data that allows Iranian missiles to find their marks. This is strategic debt collection for Western intelligence support to Ukraine.

3.2 China — Technology, Trade, and the Yuan Card

China’s involvement operates across three vectors: hardware transfers, satellite infrastructure, and currency diplomacy.

Technology: China has supplied Iran with advanced radar systems including the YLC-8B anti-stealth UHF-band radar, transitioned Iranian military navigation from US GPS to China’s encrypted BeiDou-3 constellation, and Iran is reportedly nearing a deal to acquire 50 CM-302 supersonic anti-ship missiles (Mach 3, sea-skimming) — described by military analysts as “carrier killers.”

Currency diplomacy: As of 18 March, Tehran is in discussions with eight countries outside the Middle East over granting safe passage to oil traded in Chinese yuan. Some vessels have already begun falsely identifying as Chinese-owned to transit the strait. This represents a potential inflection point in de-dollarisation of energy markets.

Strategic logic: Analysts assess that China is treating the conflict as a live-fire laboratory. Every engagement against US carrier strike groups generates targeting and intercept data that Beijing’s military planners will study for the scenario they actually care about: Taiwan.

4. The Hormuz Blockade — Current Status

The Strait of Hormuz, linking the Persian Gulf to the Gulf of Oman, is 33 km wide at its narrowest point with shipping lanes just 3 km wide in either direction. Approximately 20 million barrels of oil transited daily before the conflict. As of mid-March 2026:

• Tanker traffic has dropped by approximately 70%, with over 150 ships anchoring outside the strait
• 21 confirmed attacks on merchant vessels since 28 February
• Iran selectively allowing passage: Turkey, India, Saudi (for India), and Chinese-flagged vessels have transited
• Bypass routes under threat: Fujairah oil zone and Oman’s Duqm/Salalah ports struck by drones
• Daily Gulf oil exports down at least 60%. Brent crude above $102/barrel
• New Supreme Leader Mojtaba Khamenei has explicitly vowed to maintain the blockade

5. The Coalition That Wasn’t

Trump’s call for an international naval coalition to secure the Strait of Hormuz has been met with near-universal refusal from traditional allies:

• EU foreign policy chief Kaja Kallas: “There is no appetite. This is not Europe’s war.”
• France’s Macron: “We are not party to the conflict and France will never take part in operations to open or liberate the Strait of Hormuz in the current context.”
• Germany, Italy, Japan, and Australia have ruled out sending naval vessels
• Trump reversed course on 18 March, claiming the US “no longer needs or desires NATO countries’ assistance”

The failure to build a coalition exposes the diplomatic cost of the broader “America First” posture. As one European diplomat noted: allies who opposed the war feel “relatively less inclined to provide support to it.” Meanwhile, a US Navy warship carrying Marines is transiting the Malacca Strait towards the Gulf, bringing the conflict logistics directly past Southeast Asian waters.

6. Implications for Malaysia & Southeast Asia

6.1 Energy Exporter Advantage

Malaysia stands out as one of Asia’s few net energy exporters. With Brent crude above $100/barrel and petroleum-related income projected at 12.5% of government revenue in 2026, the price surge provides a direct fiscal tailwind. While global funds have withdrawn $11 billion from developing Asian markets (ex-China) in a single week — including record outflows from Taiwan, South Korea, and India — Malaysia’s KLCI has lost only 1.2% and foreign stock flows remain positive for the quarter.

6.2 Strategic Positioning

Bloomberg reports that global investors increasingly view Malaysia as a relative safe haven, citing political stability under PM Anwar Ibrahim’s administration, record FDI, semiconductor industry investment, and the data centre build-out. The combination of energy exporter status and diversified economic initiatives differentiates Malaysia from regional peers grappling with policy uncertainty.

6.3 Risks to Watch

• Malacca Strait as military transit corridor: US naval assets are passing through en route to the Gulf, raising the profile of Southeast Asian waterways in great-power competition
• Yuan-denominated oil trade: if Iran’s safe-passage-for-yuan model gains traction, it could reshape regional energy payment systems with implications for Malaysia’s own oil and LNG exports
• Supply chain disruption: prolonged Hormuz closure affects semiconductor supply chains (helium, specialty chemicals) and could impact Malaysia’s manufacturing sector
• Global recession risk: oil above $100 for a sustained period historically correlates with economic contraction in import-dependent economies, which would reduce demand for Malaysian exports

7. Conclusion

The Iran war has moved beyond a bilateral US-Iran confrontation into a systemic reshaping of global maritime order. Russia and China are not merely supporting Iran — they are using the conflict to demonstrate and refine alternatives to Western-led security architecture. The Strait of Hormuz has become a sorting mechanism: nations with relationships to Tehran, Beijing, or both can trade; those aligned exclusively with Washington face disruption.

For Malaysia, the immediate picture is favourable — energy revenues, capital inflows, and investor confidence. But the medium-term demands strategic awareness: the rules governing global energy transit, payment systems, and maritime security are being rewritten in real time, and Southeast Asia sits at the geographic crossroads of these changes.

Sources

Bloomberg, Al Jazeera, CNN, CNBC, Axios, Time, CBS News, NBC News, Wikipedia (2026 Strait of Hormuz crisis), The War Zone, Defence Security Asia, Congressional Research Service, Chatham House, Al Mayadeen, The Moscow Times, Reuters.

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