The United States says its campaign to choke off Iran’s oil revenue may finally be showing results where it matters most: China.
Treasury Secretary Scott Bessent said Tuesday that Chinese purchases of Iranian crude have fallen sharply after Washington expanded sanctions on the country’s independent “teapot” refiners, which have long been the primary buyers of discounted Iranian barrels. Speaking to Fox Business, Bessent said China’s crude purchases have dropped by about 40% over the past several months, putting direct financial pressure on Tehran.
“We’ve seen a substantial decrease in their purchases of Iranian oil,” Bessent said.
The sanctions are only part of the story.
China has been buying less crude from just about everyone since the Iran war erupted. Faced with $100-plus oil earlier this year and severe disruptions through the Strait of Hormuz, Beijing leaned on the enormous stockpile it built before the conflict instead of chasing expensive cargoes. Official customs data showed June crude imports plunged to their lowest level since 2016.
That retreat removed one of the biggest sources of demand from the global market just as more than 10 million barrels per day of Middle Eastern supply disappeared from normal trade flows. It also helped prevent oil prices from climbing even higher.
Iran felt the pain more than most because China has been the largest destination for its sanctioned crude.
Whether that relief for oil markets lasts is another question.
Analysts have been warning that China’s buying slowdown was never likely to be permanent. The country has already begun drawing down inventories, with the International Energy Agency estimating China pulled roughly 41 million barrels from storage in June alone. As those reserves shrink, refiners will eventually need to return to the market.
At the same time, Beijing has started easing some fuel export restrictions. Fuel oil exports climbed to their highest level of the year in June as shipping demand recovered, although broader exports of gasoline, diesel and jet fuel remain well below last year’s pace under government controls.
By Julianne Geiger for Oilprice.com
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