China-Iran Oil Trade: Risks and Challenges

China-Iran Oil Trade: Risks and Challenges

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China-Iran Oil Trade: Risks and Challenges

China's secretive oil trade with Iran, defying US sanctions, faces risks from potential Israeli strikes on Iranian oil infrastructure.

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French
France
International RelationsMiddle EastChinaGeopoliticsEnergy SecurityTradeSanctionsEnergy
SinopecVortexaKplerWood MackenzieLloyd's List Intelligence
Wang YiHomayoun FalakshahiMichelle Wiese BockmannFrancis PerrinJean-Pierre FavennecEmma LiTomer FadlonBenyamin NetanyahouJoe Biden
How does China circumvent US sanctions on Iranian oil?
China buys almost all of Iran's oil exports, defying US sanctions. This trade involves small, private Chinese refineries and a "shadow fleet" of ships to avoid detection.
What measures have the US taken to counteract the China-Iran oil trade?
The US has sanctioned Chinese companies and seized Iranian oil shipments for violating sanctions. China and Iran have employed tactics like using smaller refineries, employing "shadow fleets", and relabeling oil to circumvent these measures.
What are the alternative sources of oil for China, and what are the associated risks?
While China could replace Iranian oil with supplies from Saudi Arabia, Iraq, or the UAE, there are political risks. Saudi Arabia might fear Iranian retaliation, and if Gulf oil supplies dwindle, China would face difficulty finding replacements.
What are the potential consequences for China if Iranian oil infrastructure is attacked?
Potential strikes on Iranian oil infrastructure could disrupt oil flow to China, leading to higher oil prices as China would need to source oil from more expensive suppliers, such as Saudi Arabia, although China has sufficient reserves.
What is the potential for escalation if Iran's oil infrastructure is attacked, and what are the consequences for China?
The risk of escalation remains, with Iran threatening to block the Strait of Hormuz if attacked. This would severely impact global oil trade and further increase prices for China. However, experts deem this scenario unlikely at present.