Beijing is now placing energy security at the top of its strategic agenda following the February 28 confirmation of Iranian Supreme Leader Ayatollah Ali Khamenei’s death.
China now faces a halt, enforced by Iran’s Revolutionary Guards, to shipping through the Strait of Hormuz – a route through which transits a substantial share of its crude imports. The result will be sharply increased shipping risks, inflated insurance premiums and higher costs of oil deliveries to the world’s largest manufacturing economy.
A potential change of regime in Tehran also threatens the opaque flow of discounted Iranian crude to China, according to some Chinese commentators.
US sanctions have limited Iran’s official exports, so much of its oil has been sold to China at discounted prices, they say. Without this cheaper supply, many of China’s so-called “teapots” – small and mid-sized independent refineries in Shandong province – would struggle to keep costs low. Energy and manufacturing prices across the economy would rise.
Chinese commentators warn that any regime change, social unrest or civil war in Iran could threaten China’s energy security. They also acknowledged that China has imported Iranian oil via third countries in recent years, and that this supply channel, carried by the so-called “Iranian shadow fleet” of US-sanctioned oil tankers, is now at risk.
“Since 2022, US sanctions have forced China to stop formally disclosing Iranian oil imports in customs data, with shipments instead routed through third countries such as Malaysia,” says a Henan-based columnist writing under the pen name Keke.
He says China imported about 1.38 million barrels per day of Iranian oil in 2025, roughly 13.4% of its seaborne crude imports, making Iran China’s third-largest supplier after Russia and Saudi Arabia. He added that China buys about 80-90% of Iran’s crude exports.
“Iranian oil is important not only for volume but for price,” he writes. “It is typically discounted by 10 to 20 dollars per barrel compared with global benchmarks. This advantage is crucial for China’s independent refineries, which account for about a quarter of national refining capacity and rely heavily on discounted crude to stay competitive.”
He adds that most Iranian crude is shipped through the Strait of Hormuz, a global oil chokepoint, so any disruption would seriously affect China’s energy supply.
Besides worrying about energy security, China is also concerned that its long-term investment in Iran could be affected if social unrest escalates.
Keeping a cautious distance
All these factors are prompting Beijing to criticize the United States only in high-profile terms while maintaining a cautious distance from deeper involvement in the Iranian crisis.
“The US-Israeli strikes have no United Nations Security Council authorization and violate international law. China is deeply concerned about the regional spillover,” Foreign Ministry spokesperson Mao Ning said at a regular media briefing in Beijing on Monday. “China believes that the sovereignty, security and territorial integrity of the Gulf states should likewise be fully respected. We urge parties to stop the military operations and prevent further spread of the conflict.”
China is one of the five permanent members of the UN Security Council, alongside France, Russia, the United Kingdom and the US. Any of them can veto action, making approval for strikes on Iran highly unlikely.
“The Strait of Hormuz and its adjacent waters are an important international trade route for goods and energy,” Mao Ning said. “To keep the region secure and stable serves the common interests of the international community.”
She said China urges relevant parties to immediately stop military operations, avoid further escalation and prevent regional turmoil from causing greater damage to global economic growth.
Mao also moved to rebut a Reuters report from February 24 that said a deal for Chinese-made CM-302 missiles for Iran was near completion.
“The report is not true. As a responsible major country, China always abides by its international obligations,” she said. “China opposes ill-intentioned association and the spread of disinformation, and hopes relevant sides will choose the course of action conducive to de-escalating the tense situation.”
Iranian shadow fleet
China’s reliance on Iranian heavy crude has grown since the US captured Venezuelan president Nicolás Maduro in a January 3 military operation in Caracas, disrupting a major source of discounted heavy crude for China’s teapots.
The Iranian crisis deepened on February 28 when US and Israeli airstrikes killed Khamenei, triggering a widening regional conflict and immediate disruption to oil flows.
Following the closure of the Strait of Hormuz, Brent crude jumped 7.6% to US$78.41 a barrel early Monday, while US West Texas Intermediate rose more than 7.4% to US$72.01.
(The strait’s closure has been too toughly enforced, even from Tehran’s standpoint. On March 1 – by mistake – Iran attacked a tanker under US and EU sanctions near Oman’s Musandam Peninsula, injuring four crew members. The vessel, Skylight, is owned by Sea Force Inc and managed by Red Sea Ship Management LLC. Both Sea Force and Red Sea Ship Management are based in the UAE. Last December, the US Treasury sanctioned both the company and the tanker for operating a shadow fleet transporting Iranian oil in the Persian Gulf.)
According to United Against Nuclear Iran (UANI), a New York-based organization, ghost fleet tankers transported about US$45.7 billion worth of sanctioned Iranian oil to buyers in China last year. The group said the trade relies on ship-to-ship transfers in waters within Malaysia’s exclusive economic zone, with tankers sailing daily through the Malacca Strait and anchoring off eastern Johor with little scrutiny.
Last August, the US State Department sanctioned two China-based oil terminals for assisting in the import of Iranian oil on US-designated tankers. It was the fourth round of sanctions targeting Chinese operators in Iran’s oil supply chain. Last September, the US Treasury sanctioned a network of shipping companies and vessels led by an Iraqi-Kittitian businessman for smuggling Iranian oil disguised as Iraqi crude.
Some Chinese commentators said Pakistan’s Gwadar port has become strategically more important amid the Iranian crisis. Connected to China’s Xinjiang region through the China-Pakistan Economic Corridor, the deep-water port could help bypass both the Strait of Hormuz and the Malacca Strait. In practice, Saudi Arabia could redirect some oil exports through its East-West pipeline to the Red Sea and onward to Gwadar.
US-China relations
The elimination of Khamenei is also politically sensitive for relations between Washington and Beijing, coming only a month before Trump is expected to meet President Xi Jinping in Beijing. Some analysts say China is unlikely to sacrifice ties with the US over Iran.
“China will maintain strategic composure. Despite close China-Iran relations, the likelihood of direct Chinese military involvement is extremely low,” says Zhang Jiuzhen, a Chinese commentator studying at the S. Rajaratnam School of International Studies at Nanyang Technological University. “China will not completely rupture relations with the US over Iran, especially ahead of Trump’s visit.”
Zhang says Beijing is likely to offer Iran diplomatic and limited economic or technical support while maintaining communication with Washington to prevent escalation and preserve room for maneuver if Iran’s political situation changes.
“In 2021, China and Iran signed a 25-year, US$400 billion comprehensive cooperation plan. China is Iran’s largest oil buyer and has invested heavily in its energy and infrastructure projects,” he says. “If the conflict spreads, these projects worth tens of billions of dollars could face suspension, damage or even total loss.”
A Shandong-based writer says China’s top priority now is to minimize losses and protect its core interests in Iran.
He says China must keep necessary communication with the US to prevent the situation from spiraling out of control and leave diplomatic room for all possible outcomes, including a change of regime in Iran.
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