China, the world’s top crude importer, has been the main buyer of oil from OPEC producer Iran in recent years but will face competition as well as higher prices after the US issued a 30-day sanctions waiver on Iranian oil.
Beijing, which has also been the biggest buyer of oil from Venezuela and a top importer of oil from Russia, used purchases from the three countries facing various Western sanctions to save billions of dollars on its import bill in recent years.
China buys more than 80 per cent of Iran’s shipped oil, data for 2025 from analytics firm Kpler showed. Iranian oil has had limited buyers due to US sanctions aimed at cutting off funding to Tehran’s nuclear programme. China purchased on average 1.38 million barrels per day of Iranian oil last year, according to Kpler. That represented about 13.4 per cent of the total 10.27 million bpd of oil it imported by sea.
Chinese independent refiners known as teapots, mainly in Shandong province, are the main buyers of Iranian crude, drawn by its discount to non-sanctioned barrels. Teapots account for roughly a quarter of Chinese refinery capacity, operate on narrow and sometimes negative margins and have been squeezed recently by tepid domestic demand for refined products.
China’s big state oil companies have refrained from buying Iranian oil since 2018/2019, traders and experts have said.
Iranian Light crude has traded at around $8 to $10 a barrel below ICE Brent on a delivered basis to China since December, from a discount of about $6 in September, traders said. That means Chinese refiners save about $8 to $10 a barrel if they buy Iranian Light rather than non-sanctioned Oman crude, according to calculations by a trader and Reuters.
In February, the Iranian Light discount widened to more than $10 a barrel. Since the first US-Israeli strikes on Iran on February 28, there has been scarce trading of Iranian oil. Those sparse deals done were at a discount of $9 per barrel. Discounts have slightly narrowed due to the supply uncertainty as the conflict grew.
Energy Aspects on March 19 estimated 130-140 million barrels of Iranian oil-on-water, equivalent to less than 14 days of the current Middle East production losses.
Data by Kpler pegged the latest Iranian oil on water at 171.6 million barrels.
Washington reinstated sanctions on Tehran in 2018, and US President Donald Trump’s administration imposed several new rounds of sanctions on Iran’s oil trade since taking office last year. Trump’s sanctions have included penalties on three Chinese teapots, which have curtailed buying from several mid-sized independents worried about being designated, Reuters reported.
Beijing rejects unilateral sanctions and defends its trade with Iran as legitimate. Iranian oil imported by China is typically labelled by traders as originating from other countries, such as Malaysia, a major transshipment hub, and Indonesia. Chinese customs data has not shown any oil shipped from Iran since July 2022.
