Key facts
- China's purchases of Iranian crude oil have decreased by approximately 40% in recent months.
- U.S. Treasury Secretary Scott Bessent attributed the decline to expanded sanctions on Chinese refiners.
- China's overall crude imports fell to their lowest level since 2016 in June.
- China has been drawing down oil inventories, depleting an estimated 41 million barrels in June.
- Beijing has begun easing some fuel export restrictions.
U.S. Treasury Secretary Scott Bessent announced that China's purchases of Iranian crude oil have fallen sharply, by approximately 40% over the past several months. Bessent stated in an interview with Fox Business that expanded U.S. sanctions on China's independent "teapot" refiners, which have been primary buyers of discounted Iranian barrels, are contributing to this decline.
Beyond sanctions, China has reduced its overall oil purchases from various suppliers since the eruption of the Iran war. Facing high oil prices and disruptions through the Strait of Hormuz earlier this year, Beijing relied on substantial stockpiles built before the conflict. Official customs data indicated that China's crude imports in June dropped to their lowest level since 2016.
This reduction in demand from China, a major importer, occurred as significant volumes of Middle Eastern supply were diverted from normal trade routes. Analysts, however, caution that China's buying slowdown may not be permanent. The country has begun drawing down its reserves, with the International Energy Agency estimating China removed about 41 million barrels from storage in June alone. As these reserves deplete, refiners will eventually need to re-enter the market for new supplies. Concurrently, Beijing has started to ease some fuel export restrictions, with fuel oil exports reaching their highest point of the year in June, although broader exports of gasoline, diesel, and jet fuel remain below last year's pace due to government controls.