Amid Venezuela Episode, Iran Tensions Raise Concerns Over China’s Oil Security

The shift is set to disrupt supply for China’s refiners, which depend heavily on buying discounted oil from nations placed under sanctions. As the world’s largest crude importer and the second-largest consumer of oil and gas, China buys discounted oil from Iran, Russia and Venezuela. China's oil demand in 2025 was around 760 million tons.

After Venezuela, the developments in Iran are likely to create further issues in procuring crude oil for the Chinese government. US President Donald Trump has already stated that Washington and Caracas have agreed to allow up to $2 billion worth of Venezuelan oil exports to flow to the United States, after the capture of Venezuelan President Nicolas Maduro. Despite Trump now warming upto China, the shift in oil trade dynamics may make it difficult for Chinese importers.

China's Purchase Of Venezuelan Oil

According to Centre For Global Energy Policy, China's purchase of Venezuelan oil is significantly higher than the official estimate of about 30,000 barrels per day. "The discrepancy is due to the efforts of shippers to conceal the crude’s Venezuelan origin," it said.  

 “The action taken by the US against Venezuela obviously violates international law. It also violates fundamental tenets of inter-State relations, such as sovereignty and non-interference in internal affairs," Gautam Bambawale, former Indian Ambassador to China, Pakistan, and Bhutan, told The Secretariat.  

"The US action must be seen in light of the 'Trump Corollary' to the Monroe Doctrine, voiced in its National Security Strategy 2025, that the Western Hemisphere is the backyard of the US, and it will not tolerate any activity against its own interests in this geography. The rules-based world order is breaking down, and India will have to factor this into its own security calculus,” Bambawale added.

Dependence On Iranian Crude

Besides Venezuela, China's dependence on Iran for oil supplies has also been going up in the last few years. About 90% of Iranian oil flows into Beijing, notwithstanding US sanctions. However, in this case as well, Iranian oil is rarely reported as such in official Chinese customs data and is rerouted and rebranded as originating from Malaysia, Indonesia, or Oman, a person tracking the trade routes said.
 
Over recent years, China has emerged as Iran’s most important oil customer. Iranian crude is often sold at discounted prices to Chinese refiners. These imports have helped China manage energy costs at a time of uneven economic recovery and fluctuating global oil prices.

Iran-China Ties

The relationship between Iran and China has been a cosy one over the past few decades. China has long backed Tehran and in 2021, the two nations signed a 25-year cooperation deal.  

Both sides have repeatedly reiterated their backing to the respective governments. Last year, during a meeting with Iranian counterpart Seyed Abbas Araghchi, Chinese Foreign Minister Wang Yi reaffirmed China's continued support to Iran in safeguarding its national sovereignty and dignity, resisting power politics and bullying.  He also supported Iran's legitimate rights and interests through political negotiation.

Sources stated that rising troubles in Iran pose a significant test to that relationship. As Iran faces mounting geopolitical pressure, regional instability, and tighter enforcement of sanctions, the implications for China’s oil supply are becoming more pronounced.

However, this overdependence on Iranian crude oil can also create vulnerability for the Chinese regime. Any disruption to Iran’s ability to produce, transport, or export oil would have a direct impact on Chinese buyers, especially as the communist regime has limited access to alternative oil suppliers.

Growing Risks

Strategic experts believe that any escalating conflict in Iran could damage oil infrastructure, disrupt shipping routes, or increase insurance and transport costs for tankers operating in the West Asia region. Which means that the oil imports of China could become expensive.

If Iranian oil exports to China face disruptions, Chinese refiners are likely to turn to alternative sources, such as Russia, West Asia, or Africa. However, these substitutes could turn out to be more expensive and may aggravate the already strained Chinese economy.

The International Energy Agency stated that China was responsible for more than 60% of the global increase in overall oil demand between 2013 and 2023; it represented less than 20% of last year’s rise.  

It is understood that the recent geopolitical developments could put added pressure on industries, transportation, and consumers in China, causing higher import costs and increased price volatility.

Iran’s troubles can pose a threat to oil pricing in China. Unless instability is resolved and the cleric-backed regime regains composure, China could face severe supply chain issues in meeting its energy demands.