Venezuela And Iran Unrest: Implications For China’s Oil Import Economics – Analysis

By Fabio Ashtar Telarico

On January 3, US forces captured Venezuelan President Nicolás Maduro, a move that has triggered a wider debate about exerting geoeconomic leverage over oil flows. Crucially, Washington’s stated intent is to ‘run’ the country, ring-fencing oil revenues by holding them in dedicated US Treasury accounts. Against this backdrop, and amid risinguncertainty surrounding Iran, another sanctioned oil producer tied to China, several analysts published reports foreshadowing a material disruption to Beijing’s oil supplies.

The goal of this report is to distinguish exposure from dependence using publicly available trade and refinery indicators, and to foreground a simple distinction: China benefits from sanctioned crude, but it does not depend on it. Brent prices in January 2026 remain well below the post-2022 peaks, and China sources crude from a highly diversified supplier base. Available indicators suggest that the strategic issue is not physical supply security, but the pricing advantage associated with marginal barrels that enter China through higher-risk channels. Those barrels matter because the discounts that sanctioned suppliers grant to compensate buyers for legal, logistical, and financial risk also provides a marginal advantage benefitting independent Chinese ‘teapot’ refiners. Seen through this lens, tighter US pressure on Venezuela and Iran may succeed in compressing discounts and raising transaction costs within the sanctions-evasion ecosystem China has learnt to exploit. Conversely, it is implausible that such moves will cut Beijing off from oil outright or cause a systemic shortage.

Eroding China’s Price Advantage

In a nutshell, China’s relationship with sanctioned oil is best understood as opportunistic arbitrage rather than structural dependence. Brent has traded well below the 2022–23 spikes above $100, hovering from the mid-$60s into the low-$70s in January 2026, which limits the extent to which discounted barrels become ‘existential.’ In this context, scale and diversification also matter: customs-based reporting puts China’s 2025 crude imports at about 11.55 million b/d, underscoring its ability to substitute volumes if price and logistics allow.  In mid-2025, independent estimates valued the discount on Iranian oil due to sanction-enforcement risk at $3/b under the Brent. Meanwhile, the Energy Information Administration (EIA) documented the mechanics of Chinese participation in sanction-evasion by highlighting that many barrels attributed to Malaysia are Iranian-origin crude re-labelled to avoid detection. Against this backdrop, tighter US pressure on Venezuela and Iran is unlikely to remove oil from China outright. The more plausible effect is to erode the sanctions-discount ecosystem by raising transaction costs, narrowing spreads, and increasing volatility for marginal barrels. This reinforces the conclusion that sanctioned suppliers such as Iran and Venezuela matter primarily to ‘teapot’ refiners because of the discount at which they sell.

Venezuela illustrates how US pressure can operate as a tool of friction rather than deprivation for China. In recent years, China has been the dominant end-buyer for Venezuelan crude, often via trans-shipment hubs, with China-bound flows frequently measured in the hundreds of thousands of barrels per day. Relative to China’s 2025 crude imports of about 11.55 million b/d, the strategic issue is therefore margin and risk on marginal barrels rather than supply security. Recent US actions have concentrated on the enabling infrastructure of these trades. On December 31, 2025, the US Office of Foreign Assets Control (OFAC)  sanctioned four companies operating in Venezuela’s oil sector and identified four associated tankers as blocked property, explicitly signaling heightened sanctions risk for actors facilitating sanctions evasion. US forces also seized multiple Venezuela-linked tankers during January 2026, increasing the probability of disruption for grey-market shipments. The likely commercial effects include higher freight and insurance premia, increased reliance on opaque routing and blending, and a smaller pool of intermediaries willing to handle Venezuelan barrels. The implication for China is not an oil shortage, but reduced access to discounted crude and an erosion of the advantage that made Venezuelan barrels attractive in the first place.

Iran fits the same pattern. China is not structurally dependent on Iranian crude; Iranian-origin barrels (including those re-labelled or blended through third countries) are primarily relevant for pricing and margins rather than aggregate supply security. S&P Global reported Iranian Light offers to Chinese independent refiners at around ICE Brent minus $3/b in mid-2025, with discounts widening when enforcement risk rises. US policy has increasingly targeted the logistics and commercial infrastructure that enables that discount. On December 18, OFAC targeted 29 ‘shadow fleet’ vessels and their management firms, and the US Treasury noted that sanctions since the administration resumed office have raised costs for Iranian exporters and reduced the revenue Iran receives per barrel. The likely effect of tighter sanction enforcement and domestic instability is not an Iranian supply cutoff to China but a sudden erosion of the price advantage that could have made additional Iranian barrels a viable replacement for similarly discounted Venezuelan supplies.

Finally, China’s accelerating energy transition further limits how far pressure on sanctioned oil can translate into strategic leverage. The International Energy Agency (IEA) estimates China invested more than $625 billion in clean energy in 2024 and reached its official 2030 wind-and-solar capacity target in 2024, six years ahead of schedule. This build-out is increasingly visible on the demand side. The IEA also argues that China’s demand for the main oil-based transport fuels (gasoline, diesel, and jet fuel) has reached a plateau, with more recent growth in overall oil demand increasingly linked to petrochemical feedstocks rather than combustion engines. Electrification reinforces, with market analyses reporting that electric and hybrid vehicles reached 51.1% penetration of the Chinese retail market in March 2025. Taken together, these trends reduce the strategic payoff of constraining China’s access to cheap crude and reinforce that sanctioned oil is primarily a marginal-cost issue (refinery margins and petrochemical feedstocks), not a systemic vulnerability for China’s overall energy security.

• This article was published at Geopolitical Monitor.com