China’s Record-High Oil Imports from Iran: A Geopolitical and Economic Analysis

China’s crude oil imports from Iran surged to an unprecedented 1.8 million barrels per day (bpd) from June 1–20, 2025—a new high in bilateral energy trade Kpler data corroborates this trend, indicating about 1.46 million bpd through June 27  This blog dissects the economic, geopolitical, historical, and market implications of China’s strategy in securing Iranian oil.

Historical Context of China–Iran Energy Ties

The 25‑Year Cooperation Agreement

In March 2021, China and Iran signed a 25‑year Comprehensive Strategic Partnership, aiming to secure discounted Iranian oil as part of broader energy and infrastructure cooperation Though details remain vague, the pact signals Beijing’s long-term energy ambitions.

Sanctions-Era Adaptations

Since the U.S. reimposed sanctions in 2018, Chinese “teapot” refiners—small, independent firms—have taken the lead in importing Iranian crude, often via intermediaries or “ghost fleet” vessels They disguise shipments as Malaysian or UAE-origin to evade penalties.

Why June 2025 Marked Record Imports

Surge in Loadings and Discounts

Iran increased oil exports to 1.83 million bpd in May, delivering much of it to China in June due to transit time Independent Chinese refiners seized the opportunity as Iranian Light traded roughly $2 below ICE Brent, down from $3.30‑$3.50 in July prices 

Teapot Refineries Replenishing Stock

China’s stockpiles had dwindled ahead of the summer driving season. Teapot refiners, operating on tight margins, aggressively restocked via discounted Iranian barrels 

Shift in U.S. Sanctions Enforcement?

Analysts and Reuters note signs that the Trump administration may be relaxing sanctions enforcement:

  • Trump indicated China “can now continue buying oil from Iran”

  • Market fears of Iranian Strait of Hormuz disruptions eased after diplomatic signals, narrowing price discounts

Economic Implications for China and Iran

China Secures Energy at a Discount

Iranian imports now account for approximately 13.6% of China’s crude supply—a strategic diversification away from Middle Eastern and sanctioned sources  With a strong current-account surplus and strategic reserves, China leverages oil arbitrage while shielding against price volatility

Revenue Windfall for Iran

Despite U.S. sanctions, Iran monetizes its oil through China. Ship-tracking and shadow‑fleet analyses confirm China takes over 80‑90% of Iranian oil exports Estimated earnings near US $50 billion annually—bolstering state coffers and funding regional proxy activities

Geopolitical Ramifications

U.S.–China Sanctions Contest

The U.S. is caught between sanction goals and economic reliance on China. The 2025 threats of secondary sanctions against importers like China created friction  However, Trump’s recent comments suggest potential tactical flexibility—balancing sanctions with broader trade negotiation leverage.

Energy Leverage vs. Strategic Conflict

Amid regional tensions—like U.S. and Israeli strikes on Iran and warnings over the Strait of Hormuz—China emphasizes diplomacy. Beijing advocates a ceasefire and defends steady transit through the Persian Gulf 

Implications for Global Alliances

China’s deepening ties with Iran via sanctions evasion—is drawing U.S. scrutiny. This dynamic may accelerate geo-economic blocs:

  • Iran asserts independence from Western pressure.

  • China champions alternative global trade routes like BRI.

  • The U.S. weighs sanction enforcement vs. economic détente with China.

Impact on Global Oil Markets

Market Supply & Price Signals

Iranian oil through China adds to global supply, weakening OPEC+ control  Middle East disruptions, particularly in Hormuz, still pose upside risk. Goldman Sachs warns prices could soar above $100/bbl if flows are disrupted 

Asia’s Energy Security

Asia’s heavy dependence on Persian Gulf oil—especially the 20% passing via Hormuz—makes regional stability pivotal . China and India, less vulnerable due to diversification and strategic reserves, contrast sharply with more exposed economies like Japan and South Korea 

Sanctions Efficacy Under Spotlight

If China continues Iran purchases with minimal penalty, U.S. unilateral sanctions may lose bite. This could embolden Iran, weaken constraining mechanisms, and reshape future sanction strategies.