North Korean leader Kim Jong-Un smiles during a visit to the Chemical Material Institute of the Academy of Defense Science in this undated photo released by North Korea's Korean Central News Agency (KCNA) in Pyongyang on August 23, 2017.

KCNA | Reuters

North Korean leader Kim Jong-Un smiles during a visit to the Chemical Material Institute of the Academy of Defense Science in this undated photo released by North Korea’s Korean Central News Agency (KCNA) in Pyongyang on August 23, 2017.

“China has domestic oil production options, although up to 58% of this could be at risk of shut-in in the event of escalating tensions,” Graham said.

Around 1.5 million of China’s 3.95 million barrels per day crude production comes from the North China basin, with the nearest field located 200 kilometers (124 miles) from the North Korean border, according to Wood Mackenzie.

Another 0.8 million barrels per day is produced from the Songliao Basin, which lies approximately 400 kilometers from the border, the consultancy said.

North Korea fired a missile on Tuesday — believed to be the intermediate-range Hwasong-12 — that flew over Japan and broke up into three pieces after flying 2,700 kilometers, far short of its 4,000-kilometer range.

Global oil markets would be “severely affected” in the event of a regional conflict that affects South Korea, Japan and China, where around 65 percent of Asia’s refining capacity is located, Wood Mackenzie said. But on the other hand, it added, “regional stockpiling and increased logistics costs could equally lead to a short-term price premium.”

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