The US Congress should investigate China’s purchases of Iranian oil in the past five years, a top US advisory panel on China has urged, with Tehran looming as a larger issue in the next Trump presidency.
In an annual report covering nearly every aspect of the bilateral relationship, the US-China Economic and Security Review Commission called on lawmakers to mandate a detailed study within six months to look at how the oil entered China through indirect routes, allowing the country to “insulate itself from sanctions”.
The commission – citing advocacy group United Against Nuclear Iran and other sources tracking data on Iranian oil exports – said on Tuesday that China’s imports of Iranian oil rose 9 per cent year on year in 2023.
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This meant that China bought nearly 90 per cent of Iran’s crude exports, making Iran the fourth-largest supplier to China last year, just behind Iraq, the report said.
Chinese customs have not reported any crude oil imports from Iran since 2023.
The US report also said that since late 2019, China’s major state-owned oil companies had reduced their involvement in buying and processing Iranian oil.
But China has been accused of having a parallel network of shippers, refineries, and financial institutions to obscure imports and bypass US sanctions in recent years.
“It appears oil is imported through transshipment facilities in Malaysia, the [United Arab Emirates], and Oman and relabelled as ‘Middle Eastern’ oil,” the report said, adding that China’s crude oil purchases from Malaysia surpassed Malaysia’s own production.
It suggested that Congress analyse China’s use of transshipment points and shell companies as methods to circumvent the US sanctions.
China “takes an opportunistic approach” to its relationship with Iran, as both countries share “strong opposition” to the international order led by the US, according to the report.
The recommendation was one of 32 suggestions on the report for US legislators, the results of which will be submitted to the Department of the Treasury, which should then determine if sanctionable activities took place.
China’s foreign ministry did not respond to a query about the report, but Beijing has long opposed such “unreasonable accusations” and repeatedly defended its oil trade with Iran as “normal” and conforming with international law.
Nevertheless, in April, the US House of Representatives overwhelmingly passed a legislation aimed at countering China’s purchase of Iranian crude oil as part of a package of bills being brought to the floor in response to Iran’s attack on Israel.
In October, Washington expanded sanctions on Iran’s energy sector after Tehran fired roughly 180 missiles into Israel, adding measures against “dark fleet” ships that carry its oil.
The sanctioned Iranian oil was transported by a dark fleet of older tankers that evade detection through tactics like turning off signalling systems, spoofing locations, and conducting transfers outside authorised zones, the commission said in the report.
Concerns about Tehran’s nuclear programme also prompted US president-elect Donald Trump to threaten during the election campaign to punish countries including China with higher tariffs and investment curbs if they bought oil from Iran.
During Trump’s first term, his administration adopted the “maximum pressure” approach in 2018 to squeeze Iran’s oil production to limit its nuclear and military initiatives.
Trump could take this approach again once he returns to the White House in January, Reuters reported earlier this month, citing Edison Research.
If so, China could face a squeeze on supplies of cheap Iranian crude, which make up over 10 per cent of imports by the world’s biggest buyer of oil, it said.
Iranian Oil Minister Mohsen Paknejad said last week that Tehran had made plans to sustain its oil production and exports, and was ready for possible fresh oil restrictions.
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