Chinese imports of Iranian crude moving through the Strait of Hormuz averaged about 530,000 barrels a day in July and August, down roughly 36 per cent from the first half of 2026 and 72 per cent below their October 2024 peak. Purchases have fallen about 48 per cent since the Iran war began in February, highlighting the mounting physical and financial barriers facing Tehran’s most important oil customer.
The decline comes as the United States intensifies what Treasury Secretary Scott Bessent has described as an “economic D-Day” against Iran. Washington this week announced sanctions against about 60 individuals, companies and vessels linked to Tehran and warned governments and businesses that continued dealings with Iran could expose them to secondary penalties.
China presents the biggest test of that strategy. It has been the dominant buyer of Iranian oil for years, absorbing most of Tehran’s exportable crude after Western sanctions pushed other customers away. Discounted Iranian barrels became particularly important to independent Chinese refiners, giving them access to feedstock priced below comparable Middle Eastern grades.
Washington has so far stopped short of targeting major Chinese banks or large state-owned companies that could trigger a broader confrontation between the world’s two largest economies. The restraint comes ahead of high-level engagement between President Donald Trump and Chinese President Xi Jinping and amid efforts by both sides to contain wider commercial tensions.
Beijing has nevertheless warned that it will defend what it regards as legitimate trade with Iran and opposes unilateral sanctions imposed outside the United Nations system. Any attempt to penalise major Chinese institutions could therefore turn the pressure campaign against Tehran into a wider US-China economic dispute.
Physical supply constraints are already achieving part of what sanctions are designed to accomplish. Iran’s crude loadings fell from about 893,000 barrels a day in July to roughly 156,000 barrels a day through August 17 as restrictions tightened around the Gulf. Oil stored aboard tankers and awaiting movement through the region has remained elevated.
The Strait of Hormuz, through which roughly 15 million barrels a day of crude passed during 2025, has failed to return to normal operations despite temporary arrangements that allowed some stranded cargoes to leave the Gulf. Shipping data for Tuesday showed only five commodity vessels crossing the strait, compared with a 10-day average of about 15.
A 60-day US-Iran arrangement signed in June initially produced a sharp increase in crude movements. Around 374 million barrels were cleared from the Gulf during the period, equivalent to about 6.1 million barrels a day. That was nearly three times the rate seen during the earlier blockade but remained only about 40 per cent of normal 2025 Hormuz crude flows.
The arrangement unravelled well before its August 17 expiry. A US oil sanctions waiver lasted only about 20 days, while Washington restored its blockade of Iranian ports after attacks on commercial vessels. Mine clearance obligations were never completed, and tanker movements increasingly shifted into less transparent routes, with vessels reducing or disabling automatic identification signals.
Iranian exports have consequently become more dependent on complicated ship-to-ship transfers, floating storage and vessels operating with limited tracking. These methods increase transport costs and delays while exposing traders, shipping companies and financial intermediaries to possible US enforcement.
Conditions in the Red Sea have added another layer of disruption. Houthi forces have stepped up attacks near the Bab Al Mandeb, including a deadly strike this month on a commercial vessel. Red Sea traffic has already been substantially reduced by years of attacks, forcing many ships to use the longer route around Africa.
China has partly insulated itself from supply shocks through inventories and diversified purchases. Its crude imports fell sharply during the first months of the Iran conflict, reaching 7.12 million barrels a day in June, the lowest level since October 2016. Refinery processing also dropped to levels last recorded during the early stages of the Covid-19 pandemic.
Refiners drew heavily from inventories as Hormuz supplies tightened, while Beijing restricted some refined-product exports to preserve domestic availability. Cargoes purchased during periods of improved Gulf access are expected to support imports during August and September, but sustained high prices and renewed supply constraints could limit further buying.
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