While oil gets the headlines, disruptions to liquefied natural gas (LNG) supply are a more direct threat. LNG is a key energy source for data centers, so price spikes or shortages could derail the massive capital expenditures driving the AI buildout.

The extreme energy intensity of advanced chipmaking creates a critical vulnerability. In Taiwan, the world's leading chip producer, a single major manufacturer uses up to 10% of the country's total power. This high-stakes dependency is amplified by Taiwan's limited LNG storage of only about one and a half weeks.

Re-establishing normal energy flows is not like flipping a switch. It can take months to recover even if a conflict ends quickly. Furthermore, if infrastructure like LNG plants or oil wells is damaged, the supply reduction and economic pain can last for years.

China is completely dependent on US-policed sea lanes for oil and food. The U.S. could trigger a civilizational collapse, potentially killing half the population, by simply using a few destroyers to stop energy and food flows near Singapore. This can be done without a direct military confrontation on Chinese soil.

While Asia holds 65-70 days of crude oil reserves, its Liquefied Natural Gas (LNG) buffer is measured in days, not months. With 40% of its LNG sourced from the Middle East, any disruption presents a more immediate and critical threat to power generation and industrial output than an oil shock.

Dan Sundheim identifies a potential conflict with China over Taiwan's semiconductor dominance as the single biggest tail risk to the global economy. Since Taiwan produces over 90% of advanced chips, a disruption to this fragile supply chain would be catastrophic, potentially triggering an economic crisis on the scale of the Great Depression.

LNG's market response to a blockade is far quicker than oil's due to storage limitations. With only 2-3 days of spare storage capacity, major LNG producers like Qatar are forced to shut down production almost immediately, while oil producers may have weeks of capacity.

While China's 120-day strategic oil reserve provides a significant buffer against disruptions, it has no equivalent for Liquefied Natural Gas (LNG). With nearly one-third of its LNG imports transiting the Strait of Hormuz from Qatar, any regional conflict creates immediate supply pressure, a vulnerability not present in its oil position.

A naval and air blockade, or "cordon sanitaire," presents a more dangerous and likely scenario than a direct cross-strait assault. This strategy would force an enormously difficult political and military decision upon the U.S. about whether to break the blockade and come to Taiwan's aid.