China's heavy reliance on Iranian oil imports & challenge amid Mideast war

China, the world's top crude importer, has been the main buyer of oil from OPEC producer Iran in recent years but will face competition as well as higher prices after the U.S. issued a 30-day sanctions waiver on Iranian oil.

Beijing, which has also been the biggest buyer of oil from Venezuela and a top importer of oil from Russia, used purchases from the three countries facing various Western sanctions to save billions of dollars on its import bill in recent years.

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HOW MUCH IRANIAN OIL ‌DOES CHINA BUY?

China ⁠buys more ⁠than 80% of Iran's shipped oil, data for 2025 from analytics firm Kpler showed. Iranian oil has had limited buyers due to U.S. sanctions aimed at cutting off funding to Tehran's nuclear programme. China purchased on average 1.38 million barrels per day of Iranian oil last year, according to Kpler. That represented about 13.4% of the total 10.27 million bpd of oil it imported by sea.

WHO ARE THE MAIN CHINESE BUYERS OF IRANIAN CRUDE?

Chinese independent refiners known as teapots, mainly in Shandong province, are the main buyers of Iranian crude, drawn by its discount to non-sanctioned barrels. Teapots account for roughly a quarter ⁠of Chinese ‌refinery capacity, operate on narrow and sometimes negative margins and have been squeezed recently by tepid domestic demand for refined products.

China's big state oil companies have refrained from buying Iranian oil since 2018/2019, traders and ⁠experts have said.

Also Read: India likely looking at Iran oil return, but Tehran throws a spanner

HOW MUCH CHEAPER IS IRANIAN OIL?

Iranian Light crude has traded at around $8 to $10 a barrel below ICE Brent on a delivered basis to China since December, from a discount of about $6 in September, traders said. That means Chinese refiners save about $8 to $10 a barrel if they buy Iranian Light rather than non-sanctioned Oman crude, according to calculations by a trader and Reuters.

In February, the Iranian Light discount widened to more than $10 a barrel. Since the first U.S.-Israeli strikes on Iran on February 28, there has been scarce trading of Iranian oil. Those sparse deals done were at a discount of $9 per barrel. Discounts have slightly narrowed ‌due to the supply uncertainty as the conflict grew.

Energy Aspects on March 19 estimated 130-140 million barrels of Iranian oil-on-water, equivalent to less than 14 days of the current Middle East production losses.

Data by Kpler pegged the latest Iranian oil on ⁠water at 171.6 million barrels.

ARE U.S. SANCTIONS HAVING AN IMPACT?

Washington reinstated sanctions on Tehran in 2018, and U.S. President Donald Trump's administration imposed several new rounds of sanctions on Iran's oil trade since taking office last year. Trump's sanctions have included penalties on three Chinese teapots, which have curtailed buying from several mid-sized independents worried about being designated, Reuters reported.

WHAT IS BEIJING'S STANCE ON THE IRAN OIL TRADE?

Beijing rejects unilateral sanctions and defends its trade with Iran as legitimate. Iranian oil imported by China is typically labelled by traders as originating from other countries, such as Malaysia, a major transshipment hub, and Indonesia. Chinese customs data has not shown any oil shipped from Iran since July 2022.