Donald Trump’s intervention in Venezuela has sent a shiver down the spines of oil buyers in China, not only because of their dependence on Venezuelan crude, but also because it has exposed Washington’s ability to interfere with big suppliers like Iran.
China is one of the world’s largest importers of crude oil, and about 20 percent of its purchases come from suppliers subject to sanctions by the US and the West.
If the US were to take action against Iran following its attack on Venezuela, it would further cut off supplies of cheap oil to China under sanctions, potentially hurting its economy and giving Washington an opportunity to gain leverage over Beijing.
“In general, Chinese refiners are expecting something is going to happen in the Middle East,” said Muyu Xu, senior crude research analyst at data provider Kpler, adding that it would force them to consider higher-cost, alternative supply sources.
He said if the intervention cut off the flow of cheap oil from Iran it would disrupt China’s refining sector, because “the volume of oil from there is much greater than from Venezuela”.
While China’s oil demand is falling amid a shift to electric vehicles and a years-long property sector slowdown, it remains the world’s second-largest consumer of crude.
Beijing has hit out at US interference, accusing Washington of “bullying” Caracas and saying the oil demand “infringes on Venezuela’s sovereignty, and harms the rights of the Venezuelan people”.
According to Chinese customs data, Russia is China’s largest crude oil supplier, accounting for 20 percent of imports, followed by Saudi Arabia with 14 percent and Malaysia with 13 percent, through which analysts believe the sanctioned Iranian and Venezuelan oil is smuggled.
China has also been Venezuela’s biggest buyer since 2020, when the US tightened sanctions on the South American country. According to Kpler data, Venezuela’s crude oil exports to China are expected to average about 395,000 barrels per day in 2025, accounting for about 4 percent of China’s seaborne crude oil imports.
The majority of the approved oil supply is “transshipped” – a process by which “shadow fleet” tankers secretly transfer oil to intermediary ships in waters near Malaysia to conceal their origin.
Erica Downs, a senior research scholar at the Center on Global Energy Policy at Columbia University, said in testimony to the US Congress last year that Malaysian oil exports to China were projected to grow from 5,400 barrels per day in 2015 to 1.4 million bpd in 2024, far exceeding domestic production. He said crude oil, subject to US and other Western sanctions, was to account for about a fifth of China’s total imports in 2024.
Richard Bronze, head of geopolitics at consultancy Energy Aspects, said that even if Venezuelan oil continued to flow to China, US intervention was a “meaningful geopolitical development” for Beijing because of the US “impact on the industry”.
The United States said on Wednesday it would try to control Venezuelan oil sales “indefinitely”, funneling the proceeds to American companies and opening the country to American oil services groups.
Chinese state-owned refiners such as PetroChina had largely stopped buying oil from Venezuela in the wake of US sanctions, although Caracas’ state oil company PDVSA is still owed shipments to China under a loan-for-oil agreement.
But independent refiners, known as “teapots,” have continued to take supplies of oil from Venezuela, as well as sanctioned crude from Iran and Russia. These operators account for about a quarter of China’s total crude oil processing capacity.
This makes them highly sensitive to the risk of US intervention, analysts said.
In five years, China’s imports of Iranian crude have nearly tripled to 1.4 million bpd, accounting for more than 13 percent of the country’s total seaborne shipments.
Any cessation of Iranian oil flows “would be of concern to all importers and China is the largest crude importer there,” Bronze said.
The loss of discounted Iranian oil would force China’s teapot refiners to turn to more expensive sources such as Saudi Arabia, Brazil or West Africa. Kepler’s Xu said rising costs would cause turmoil in the industry as refiners begin to make losses.
“That’s really the worst-case scenario – no one really wants to start thinking about it because if it happened it would mean a lot of teapots would probably have to be closed.”
Bronze said China has been steadily building a buffer of reserves to avoid geopolitical disruption. He said China’s dominant market position – coupled with an oversupply of crude this year that has put downward pressure on prices – would also provide Beijing with some protection from geopolitical disruption.
According to Downs, China’s above-ground and below-ground strategic and commercial storage facilities could hold enough crude oil to cover 183 days’ worth of imports at the 2024 level.
“China has pipeline routes, seaborne imports, is Russia’s largest customer, and for most Middle Eastern exporters, China is their priority,” Bronze said. “China is probably going to be at the front of the buying queue for a lot of suppliers.”
Yet some analysts expressed doubt about Trump’s appetite for taking decisive action against the Iranian regime. Before his kidnapping by US forces over the weekend, Venezuela’s Nicolas Maduro was leading an economy in recession.
“In Venezuela, it’s like a building that’s already rotten—when it’s about to collapse, just push it up. The cost is very low,” said Cui Shaojun, a professor at the School of International Studies and associate dean of the School of Global Governance at Renmin University of China.
“If someday Iran reaches the brink of collapse, the US and Israel may also push it, but the US will not hastily intervene before it reaches that critical point,” he said.
With additional contributions from Cheng Leng, Tina Hu and Wenjie Ding in Beijing. Data Visualization by Haosiang Co in Hong Kong
