China buys record amounts of Iranian oil amid escalating tensions

In June 2025, China significantly boosted its oil imports from Iran, reaching over 1.8 million barrels per day in the first three weeks, compared to 1 million barrels per day the previous month. This surge happened shortly before Israel commenced airstrikes on Iranian nuclear sites, which intensified global scrutiny on Iran's energy exports. Official reports from China denied these purchases, creating discrepancies between what was reported and actual shipping data. The increase was likely influenced by fears of potential disruptions to shipping routes in the Persian Gulf, alongside China's strategy to secure discounted oil from sanction-hit nations. Despite the geopolitical risks and U.S. sanctions, China's appetite for Iranian crude remains robust. Analysts noted that a complex network of 'shadow' tankers facilitates this trade, often employing ship-to-ship transfers at sea, making tracking challenging. These operations protect China's major banks from U.S. sanctions, allowing them to maintain steady energy supplies for their independent, smaller refineries known as 'teapot refineries'. In recent months, these refineries faced pressure from reduced demand spurred by an economic slowdown in China. However, the uptick in demand during June has provided some relief, especially as larger state-owned refiners faced maintenance periods. In the backdrop of rising tensions, President Donald Trump made comments suggesting China was free to purchase Iranian oil, which could be seen as tacit approval for these ongoing transactions. Regardless of U.S. sanctions, China and Iran have established a responsive and adaptive energy trade strategy that helps mitigate the economic impact of sanctions. The dynamic further complicates the intersection of energy dependence and geopolitical maneuvering in a rapidly evolving global landscape. Therefore, China's decision to ramp up Iranian oil imports appears to be a preemptive strategy against potential supply chain disruptions caused by continued regional conflicts and deteriorating U.S.-China relations.