China's Iranian Oil Imports Slump as US Sanctions Bite
Chinese imports of Iranian crude have fallen sharply since US sanctions were renewed, though Beijing remains the top buyer.
China's long-standing position as the largest buyer of Iranian oil is facing its biggest test yet, as renewed US sanctions begin to disrupt the trade. Ship-tracking data shows a significant drop in shipments to China in recent months, following Washington's decision to reimpose a blockade on Iranian vessels and ports in mid-July.
According to Kpler, a ship-tracking firm, Chinese imports of Iranian crude fell to 785,000 barrels per day in June, the lowest level since February 2023. While July saw a slight uptick to 823,000 barrels per day, provisional data for August indicates a sharp decline to just 534,000 barrels per day. The drop follows a period of heavy buying earlier in the year, with imports averaging 1.24 million and 1.58 million barrels per day in January and February, respectively.
The primary buyers of this discounted crude are China's independent refiners, who have stepped in where major state-owned companies have not. These large state refiners have avoided Iranian oil since 2019, when the US first reimposed sanctions, and official Chinese customs data does not record any purchases from Iran. Instead, the trade is conducted through a complex network of intermediaries, with the oil often labelled as originating from Malaysia or Indonesia and settled in Chinese currency.
Washington's latest efforts to curb Tehran's oil revenue have targeted this supply chain directly. In April, the US imposed sanctions on a major Chinese refinery, Hengli Petrochemical, along with dozens of shipping firms, accusing the company of buying billions of dollars worth of Iranian oil. Hengli has denied the allegation. The US Treasury has also warned two larger Chinese banks about potential secondary sanctions if they were found to be processing Iranian funds.
While these measures have proven disruptive, they have not yet halted the overall flow of oil. The effectiveness of the sanctions remains unclear, as many vessels involved in the trade turn off their location transponders, making them difficult to track. For its part, China has consistently stated its opposition to unilateral sanctions and has called for a diplomatic resolution to the issues surrounding the Iran nuclear deal.