This photo taken on March 26, 2026 shows an oil tanker loading crude oil at the port of Yantai city in eastern China’s Shandong province.
CN-STR | AFP | Getty Images
Analysts say Iran is likely to face challenges cleaning up its oil inventories even after export restrictions are lifted, as oil from other suppliers floods the market while its biggest customer tweaks its energy strategy.
China, the world’s largest oil importer, has not been particularly active in purchasing Iranian crude, even though it has traditionally been the country’s main buyer of energy. “In reality, the Chinese have not shown any enthusiasm for buying much oil from anyone,” Fereydoun Fesharaki, honorary chairman of FGE Nexant ECA, told CNBC’s “Squawk Box Asia.”
Since the Iran war began in late February, China’s crude oil imports have decreased, causing oil demand to slump. According to Wind Information, production in May was 7.82 million barrels per day, down 29% from the same month last year, the lowest level since February 2018.
According to a report by Bloomberg, China’s crude oil imports from Iran halved in June from the previous month to about 654,000 barrels per day.
The Middle East conflict has “sharpened China’s strategic focus and injected new momentum into its green transition efforts,” according to a report by the Stockholm-based Institute for Security and Development Policy.
According to the research institute, Chinese Premier Li Qiang reiterated the need to promote the expansion of non-fossil energy and build a new energy system, while encouraging innovation and faster reforms.
Meanwhile, oil supplies are also expected to rise after oil cartel OPEC+ agreed to add 188,000 barrels a day to its August output target.
“This production increase is part of the group’s plan to complete a reversal of production curbs put in place several years ago, and represents an additional 940,000 barrels per day of production capacity since the war began,” the United Overseas Bank report said.
“The surge in supply is real,” Tiago Lacerda, a market analyst at brokerage Axi, said in an email to CNBC. He added that since the US lifted the naval blockade, Iranian exports have exceeded 40 million barrels, with sea-based exports surging, and Russian exports also surging to record levels.
However, the possibility of disruption to the flow of oil through the Strait of Hormuz may not be completely negligible and could complicate energy supply calculations.
Fesharaki said Iran has made it clear that the current “free” navigation in the Strait of Hormuz will only be available for 60 days, after which it will start imposing graduated tolls, adding: “If you’re my friend, you’ll pay less, but if you’re not my friend, you’ll pay more. If I don’t like you, I probably won’t even allow oil to pass through.”
—CNBC’s Anniek Bao contributed to this article.
