Iran’s paralysis of the Strait of Hormuz has continued to upend international oil and gasoline markets because the United States-Israeli war on the nation enters its second month.
After US President Donald Trump pledged to proceed aggressive strikes on Iran for one more two to a few weeks in a speech on Wednesday night, oil costs surged additional.
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Brent crude costs jumped about 5 p.c to $106.16 per barrel on Thursday morning in contrast with Wednesday, when the worth was $104.86 per barrel. Earlier this week, it surpassed $116.
Many international locations have begun tapping into strategic oil reserves in a bid to ease the results of an financial disaster.
However China seems to have largely insulated itself from the oil disaster, though the nation is closely reliant on Iran for oil.
Right here’s what we all know.
Is China proof against the oil disaster?
Not solely. China will get greater than half of its oil from the Center East, particularly Iran. In line with information from Kpler, China purchased greater than 80 p.c of Iran’s shipped oil in 2025. China’s imports of Iranian crude had been 1.4 million barrels of oil per day (mbd) in 2025, out of a complete 10.4mbd seaborne crude imports.
When the US and Israel commenced strikes on Iran on February 28, and Tehran blocked the Strait of Hormuz by means of which about 20 p.c of world oil and gasoline passes simply hours later, Beijing was already ready to deal with an power disaster, because it had been getting ready for years. In 2021, whereas visiting an oilfield within the nation, Chinese language President Xi Jinping acknowledged that the nation would take its power provide issues “into its personal arms”.
Since then, one of many key ways the nation has used to safe its oil provide is thru “teapot refineries” – smaller, impartial services which have capitalised on oil made low-cost by worldwide sanctions, stockpiling oil reserves and growing imports from international locations equivalent to Iran, Russia and Venezuela. Certainly, till the US launched its strike on Caracas in January – capturing then-President Nicolas Maduro – and successfully seizing management of the Venezuelan oil business, China was the biggest purchaser of oil from the nation.
Muyu Xu, a senior crude oil analyst at Kpler, informed Al Jazeera that China’s oil provide just isn’t solely proof against the ripple results of the battle within the Center East, nonetheless.
“China’s seaborne crude imports in March stood at 10.19 million barrels per day (mbd), down from 11.51mbd in February, however nonetheless broadly according to the 2025 common of 10.41mbd,” she mentioned.
“Nevertheless, a lot of the March arrivals had been loaded earlier than the battle started in February. As Center Jap crude accounts for greater than 50 p.c of China’s whole seaborne imports – and fewer than half of those barrels had been capable of attain the worldwide market in March – China is predicted to see a pointy decline in April arrivals.”
However Muyu famous that whereas China’s continued shopping for of Russian and Iranian crude has supplied some buffer on this oil disaster, it is not going to be enough to offset the lack of non-Iranian provides from the Center East. “Whereas our information exhibits that Iranian oil on water exterior the Persian Gulf stays near 165mb – equal to about 4 months of China’s Iranian imports – this doesn’t imply China will depend on Iranian crude as a main answer to ease the provision crunch,” she mentioned.
Whereas a big amount of sanctioned Russian oil is being shipped to China on shadow fleets flying false flags, that is additionally prone to diminish on account of the battle after Trump relaxed US sanctions. A number of Russian oil-laden tankers have already changed course on the open ocean to go for India as an alternative.
Moreover, teapot refiners can not purchase countless quantities of oil if costs rise considerably, Muyu mentioned. “State-owned refiners stay involved about compliance and operational dangers, whereas teapot refiners are additionally holding again from new purchases attributable to excessive costs and skinny margin.”
What are China’s ‘teapot refiners’?
They’re small, privately owned oil refineries based in China’s Shandong province, that are utilized by Beijing to import discounted Iranian and Russian oil to bypass sanctions imposed by the US and different international locations.
In a March 17 report for the Brussels-based financial assume tank Bruegel, Alicia Garcia-Herrero, a senior fellow at Bruegel and chief economist for Asia Pacific at Natixis, wrote: “To keep away from the reputational and monetary threat from importing sanctioned [Iranian] oil, this oil was primarily purchased by small, personal ‘teapot’ refineries, reasonably than main Chinese language state-owned oil firms.”
She famous that Iranian oil was additionally paid for in renminbi by means of China’s new Cross-border Interbank Fee System (CIPS).
These refineries are referred to as “teapots” due to their compact teapot-like form. They account for one-quarter of China’s processing capability – however they function on very slim margins, which means they’re very delicate to fluctuations within the worth of oil.
According to the Oxford Institute for Vitality Research, these refineries got here to be recognized globally in July 2015, when Chinese language crude shopping for surged.
“In regular occasions, they [the teapots] enhance gasoline provide and margins. Throughout crises, they act as a versatile buffer for discount barrels. Nevertheless, when reductions dry up and costs surge, their skinny revenue margins get squeezed, forcing some to chop operations,” Garcia-Herrero informed Al Jazeera on Thursday.
The US has beforehand imposed sanctions on a few of these teapot refineries – such because the Hebei Xinhai Chemical Group refinery within the Shandong province in Could final yr – for importing Iranian oil.
“The US stays resolved to accentuate strain on all components of Iran’s oil provide chain to stop the regime from producing income to additional its destabilising agenda,” Treasury Secretary Scott Bessent mentioned in a press release on the time.
Alejandro Reyes, adjunct professor on the Division of Politics and Public Administration on the College of Hong Kong, informed Al Jazeera that China didn’t a lot create teapots to function as “sanctions sponges”, however reasonably has tolerated an impartial system that has proved strategically helpful to it.
“These smaller impartial refiners deal with discounted and politically dangerous crude, whereas main SOEs [state-owned enterprises] stay extra insulated. US sanctions actions in 2025 and 2026 present that Washington sees that technique and construction clearly,” he mentioned.
“The resilience is intentional on the system degree, even when each single instrument inside it was not initially constructed for this precise disaster. China’s power structure now provides it optionality, redundancy and a few believable deniability,” he added.
How are the teapots serving to China amid the battle on Iran?
These teapot refineries have been conserving the Chinese language economic system secure with imported Iranian and Russian oil, whereas large Chinese language oil corporations like Sinopec push for permission to attract on the nation’s strategic oil reserves, reasonably than import Iranian oil themselves amid the battle. Nevertheless, teapots won’t be able to make up the distinction for lengthy.
Most of their present oil shares had been purchased earlier than the battle began.
“We constructed some inventories earlier, so the strain just isn’t that large for the close to time period,” a Shandong teapot government informed the Reuters information company.
In line with Oilchem, a consultancy agency which offers info on China’s commodity market, within the week ending March 5, Shandong teapot refineries had been working at 54.58 p.c of capability, up by 2.89 share factors in contrast with the week earlier than. Because the battle continues to rage, consultants say the teapots proceed to really feel the strain.
Now, because of the battle, Garcia-Herrero wrote in her March 17 report, “teapot refineries have misplaced entry to low-cost crude and face excessive substitute costs in a market already strained by international tensions”.
What else can China do to cushion itself from the oil disaster?
Moreover permitting personal teapot refineries to import portions of Russian and Iranian oil, Beijing has additionally resorted to stockpiling its personal official oil reserves, rerouting provides and relying extra closely on sanctioned Russian oil, specifically, to cushion the influence of the battle.
Stockpiling sanctioned oil
On March 31, the US Home Choose Committee reported that regardless of Western sanctions on oil produced by international locations like Russia, Iran and Venezuela, China has continued shopping for from these international locations, and this has helped it stockpile oil reserves.
“From this sanctioned crude, China assembled an enormous strategic petroleum reserve – roughly 1.2 billion barrels by early 2026, equal to roughly 109 days of seaborne import cowl – at properly under market price from the very barrels Western sanctions had been designed to strand,” the committee stated in its report.
The report added that shadow fleets – networks of older oil vessels which usually haven’t any insurance coverage – and sanctioned tankers transported about 10.3mbd final yr, with about one-third going to China.
“Chinese language firms are sometimes utilizing the infamous shadow fleet: ageing, often uninsured tankers that swap flags, go darkish on monitoring, or carry out ship-to-ship transfers to dodge sanctions and worth caps. This darkish fleet lets Beijing safe low-cost power whereas giving sanctioned producers like Russia and Iran a significant income stream,” Garcia-Herrero mentioned.
“It [China] stays a serious purchaser of Russian oil, with volumes spiking as Center East tensions rose in early 2026,” she added.
In line with Chinese language customs information, within the first two months of 2026, Russia’s shipments of crude oil to China rose by 40.9 p.c.
Getting across the Iranian Hormuz blockade
Iran, whose territorial waters lengthen into the strait, has blocked the passage of the overwhelming majority of vessels carrying oil and liquefied pure gasoline (LNG) from the Gulf to the remainder of the world because the US and Israel launched the battle on February 28.
The transfer despatched the worth of Brent crude – the worldwide benchmark – hovering properly above $100 per barrel, a bounce of roughly 40 p.c from earlier than the battle. Many international locations, significantly in Asia, have been pressured to ration gasoline and reduce industrial manufacturing. On Thursday, Malaysia ordered civil servants to work at home as a way to protect gasoline and guard in opposition to rising power prices.
Affected international locations in Asia, lots of which rely closely on provides of oil and pure gasoline by means of the Strait of Hormuz, have been scrambling to make offers with Iran for secure passage by means of the one sea route Gulf producers can use to ship oil and gasoline.
On March 4, Chinese language Overseas Ministry spokesperson Mao Ning informed reporters: “Vitality safety is of nice significance to the worldwide economic system … China will take needed measures to make sure its power safety.”
In mid-March, Iran started permitting some Iranian vessels and a handful of ships from international locations Iran deems pleasant, equivalent to Malaysia, China, Egypt, South Korea, India and Pakistan, to go as properly.
On March 31, a Chinese language Overseas Ministry spokesperson informed reporters that three Chinese language ships had sailed by means of the strait.
China has additionally diversified oil imports by growing the quantity it imports by pipeline from Russia, Garcia-Herrera mentioned.
In the meantime, about 2,000 other ships wait at both finish of the strait for permission from Iran to do the identical.
“Beijing’s strategy of aggressive stockpiling, tolerating shadow networks, and conserving versatile buffers exhibits it has lengthy ready for precisely these sorts of power shocks,” Garcia-Herrero mentioned. Whereas these measures is not going to utterly immunise the nation from rising gasoline costs, it does give Beijing extra flexibility to outlive a disaster in contrast with different nations.
“China is popping geopolitical turbulence into discounted oil and strategic depth, whereas the shadow fleet retains the barrels flowing,” she mentioned.
“It’s basic great-power power chess.”
