Explainer: Looming US sanctions on Iran put China oil buying in spotlight

• Chinese imports of Iranian oil fell dramatically to 534,000 bpd in August 2026 from 1.58 million bpd in February, following a U.S. blockade of Iranian ships and ports that began July 13
• Iranian oil is delivered to China disguised as Malaysian or Indonesian crude and settled in Chinese currency through difficult-to-track intermediaries, while China's state refiners have avoided Iranian oil since 2019
• Previous U.S. sanctions targeting smaller Chinese refiners and intermediaries have done little to slow overall flows, though Washington has warned two larger Chinese banks about potential secondary sanctions

Summary: US Sanctions on Iran Spotlight China's Oil Purchases

China's role as Iran's largest oil buyer faces scrutiny as the U.S. threatens heightened economic sanctions on Tehran. Treasury Secretary Scott Bessent was scheduled to address the matter at a press conference on Monday.

Key Figures and Trends

Chinese purchases of Iranian oil averaged 1.4 million barrels per day (bpd) in the previous year, according to Kpler. However, volumes have declined sharply following renewed U.S. blockades:

• June 2026: 785,000 bpd (lowest since February 2023)
• July 2026: 823,000 bpd
• August 2026: 534,000 bpd (provisional)

The U.S. renewed Iran's ship and port blockade on July 13, with no visible Strait of Hormuz crossings since, though many vessels disable tracking transponders.

Main Players

Chinese independent refiners are primary buyers, attracted by steep discounts. Major state refiners have avoided Iranian oil since 2019 sanctions. Iranian crude is reportedly disguised as Malaysian or Indonesian oil in Chinese customs data and settled in Chinese currency through difficult-to-track intermediaries.

Sanctions Impact

Despite intensified U.S. efforts under President Trump's administration—including sanctions on smaller Chinese refiners and warnings to larger banks—overall Iranian oil flows to China have remained largely unaffected. In April, Washington sanctioned Chinese refiner Hengli (which denies buying Iranian oil) along with 40 shipping firms. Early 2026 imports reached 1.24-1.58 million bpd.

China's Position

China rejects unilateral sanctions and advocates diplomatic resolution of the matter.