Oil, Sanctions, and Strategy: Iran Exports Persist While Trump Rethinks China Trip

Iran continues to export oil in significant volumes, including to China; against this background, US President Donald Trump has postponed his visit to Beijing by one month.

Photo: navy.mil by Эндрю М. Мейерсом (ВМС США), https://creativecommons.org/public-domain/pdm/

The AbQaiq oil tanker at the Mina Al Bakr terminal.

Iran Continues Oil Exports to China

One of the factors considered in Washington in favor of launching military aggression against Iran was the assumption that Tehran would not want to close the Strait of Hormuz for fear of blocking its own oil exports. But Iran closed the strait and, surprisingly, continues to receive significant income from energy trade.

Iranian tankers continue to transport millions of barrels of oil daily through the Strait of Hormuz. The main importer remains China, which in recent years has accounted for between 50% and 90% (according to various estimates) of all Iranian crude exports. Exports continue even through the largest terminal on Kharg Island in the Persian Gulf, despite missile strikes in the area.

US officials say that at present they are not hindering the passage of Iranian tankers in order to avoid a sharp increase in global energy prices. However, there is another reason. Iran has threatened that if the United States destroys the infrastructure of Kharg Island, it will wipe out the oil industry of the country from which the strike is launched. The outcome would be catastrophic for US allies in the Gulf and for global oil trade.

According to Kpler, Iran supplies up to 1 million barrels per day (last year its average export volume was 1.69 million bpd). In reality, volumes may be higher, as Iranian tankers switch off their transponders. Iran also quickly sold millions of barrels that it had shipped to sea on tankers before the conflict began.

Iranian oil has long overcome sanctions; it is sold not directly by the state company National Iranian Oil Company (NIOC), but through a chain of intermediaries. In China, payments for Iranian oil often remain in local banks and are later used to purchase equipment, electronics, medicines, and consumer goods. Iran often buys food and steel through barter arrangements.

Iran has also increased LNG exports. The Fars agency reported that imports of natural gas from Iran tripled last week, reaching 18 million cubic meters per day. Many countries prefer to resolve the issue of passage through the Strait of Hormuz through direct negotiations with Iran, including not only India and Pakistan, but also France. All NATO allies refused the United States in forming convoys to unblock the strait.

Trump Has Lost Leverage Over China

Iran has also stated that it is considering allowing a limited number of oil tankers to pass through the strait on the condition that oil be traded in Chinese yuan. This decision is clearly intended to give China leverage over the United States.

Against this background, Donald Trump postponed his visit to China scheduled for early April. Beijing does not object, as the Strait of Hormuz is not closed to China. Beijing is also dissatisfied with the introduction of new 10% tariffs under Section 122 of the Trade Act of 1974, replacing those отменённые by the Supreme Court. At the end of this month, a Chinese representative at negotiations with the United States in Paris mentioned possible countermeasures, which disrupted preparations for Trump's visit.

Chinese media also note that after the abduction of Venezuelan President Nicolás Maduro and the aggression against Iran, public opinion in China has sharply turned against any agreements with the United States. Beijing and other capitals are concluding that no agreements can be trusted, as even during negotiations a military strike may be carried out, as was the case with Iran.

As a result, instead of traveling to Beijing as the stronger side, Donald Trump, due to multiple miscalculations and an underestimation of Iran, has found himself in a weaker position in negotiations with his main opponent.