Abstract Based on Chinese outward foreign direct investment data, this study examines the impact of the South China Sea Dispute on China's overseas investments in oil & gas-related sectors. The South China Sea Dispute alarms a potential threat to China's energy supply. By applying a difference-in-difference estimation, we find that the South China Sea Dispute brings about an increase in the frequency of China's oil & gas-related investments to low-risk countries. The findings are robust under several specification tests. It indicates that under geopolitical uncertainty environment, energy-importers will reallocate energy investment in order to avoid the potential disruption of energy supply.