China buys more than 80% of Iran's seaborne oil exports, giving Beijing outsized leverage as Presidents Trump and Xi prepare to meet at the White House on September 24. Chinese Foreign Minister Wang Yi met his Iranian counterpart on September 16 but stopped short of pressing Tehran to reopen the Strait of Hormuz, while Goldman Sachs says $100 Brent crude would likely keep Chinese refiners from materially raising imports if prices stay this high.
China is Iran's largest trading partner and buys more than 80% of Iran's seaborne oil exports, according to commodities analytics firm Kpler. Yet Iran accounts for just 1% of China's overall global trade, according to Chinese government data.
China holds the leverage over Iran
Chinese Foreign Minister Wang Yi met Iranian Foreign Minister Abbas Araghchi in Beijing on September 16, their fourth meeting in three months. Wang urged "all parties" to reopen the Strait of Hormuz, a waterway that carried about one-fifth of the global oil and gas supply before the war, without directly pressuring Tehran. According to RFE/RL: "China isn't going to do the heavy lifting", Elizabeth Freund Larus, an adjunct senior fellow at the Pacific Forum think tank, said.
War costs stretch the Pentagon, not Beijing
The Iran war has cost the Pentagon more than $38 billion through August 1, according to the Congressional Budget Office. The US now lacks a deployed aircraft carrier in the Western Pacific for the first time since World War II, after Washington diverted military assets to the Middle East. Meanwhile, Shanghai crude oil futures hit a record 929.4 yuan ($137.80) per barrel this month, after Iranian-backed proxies damaged Saudi Arabia's East-West pipeline.
Washington has sanctioned five Chinese refineries and dozens of China-linked shipping firms over Iranian oil purchases, but has held back its heaviest option: barring sanction-busting Chinese state banks from the dollar. Taipei-based lawyer and political risk consultant Ross Darrell Feingold said broad sanctions on China's financial institutions could also be disruptive to the US economy.
China's own oil buying stays cautious
Chinese refiners' appetite for crude oil remains sensitive to price. Goldman Sachs expects China's crude imports to rise by only about 600,000 barrels per day in the fourth quarter compared with the third, as long as Brent hovers around $100 a barrel.
China's crude oil imports rose 6.2% in August to 8.93 million barrels a day, recovering from a decade low in June, as refiners turned to non-Middle Eastern supply. Goldman said a further escalation of strikes on Middle East crude infrastructure, not higher Chinese imports, remains the main upside risk to its price forecast.
Expectations for a breakthrough on Iran at the Trump-Xi summit remain low, with Trump signaling a focus on economic outcomes instead.
Sources: Oilprice.com, Commodities Analysis & Opinion
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