Beijing officially welcomed the United States-Iran peace deal announced over the weekend, hoping the reopening of the Strait of Hormuz will ease a months-long oil supply disruption that has rattled China’s fuel markets and battered its refining sector.
However, the unofficial response, from the Chinese commentariat, is not so uniformly positive.
Chinese commentators do say approvingly that the reopening of the Strait of Hormuz should allow Beijing to replenish its strategic crude reserves and benefit from softening oil prices, with some sanctioned “teapot” refiners potentially finding relief in the diplomatic thaw.
However, with Western governments unfreezing Iranian assets and allowing Tehran to legally sell crude, China will lose the discounts it enjoyed by importing Iranian oil through a shadow fleet that bypassed sanctions.
“International oil prices will likely fall after the US-Iran reconciliation, which is a double-edged sword for China,” a Sichuan-based columnist using the pseudonym Fanyuzhi says. “In the short term, lower oil prices will reduce logistics costs and ease inflation. But over the long term, cheap oil will slow the push for new energy, and China stands to lose the privileged position it built with Iran during the sanctions years.”
He says that once Tehran reopens to the world, European, Japanese, and South Korean companies will rush back in to compete for the crude oil that China once had to itself.
“That said, a more stable Middle East is good for China’s Belt and Road Initiative (BRI),” he says. “Beijing helped broker the Saudi-Iranian reconciliation and played a behind-the-scenes role in the US-Iran talks as well. China’s influence in the region is clearly rising, and Middle Eastern countries will increasingly look eastward when weighing their relationships with the major powers.”
But he cautions against putting too much faith in the peace deal – saying it resembles two exhausted boxers catching their breath after the referee calls a stop, with another round still possible once their strength returns.
Since the US-Iran war broke out on February 28, it has strained China’s gasoline supply on two fronts, according to media reports. Disruptions to crude flows through the Strait of Hormuz drove up global oil price expectations, squeezing margins for Chinese refiners.
At the same time, as fuel prices remained volatile, many Chinese consumers turned to purchase electric vehicles, eroding domestic demand for gasoline and leaving the country’s independent “teapot” refiners under mounting pressure to cut output.
While US sanctions on some teapot refiners added to the pressure, the blow was less severe than expected. China’s large strategic crude reserves gave Beijing room to maintain domestic fuel supply without relying on sanctioned imports.
China’s crude oil imports fell 20% year-on-year in April to 9.25 million barrels per day, the lowest level since July 2022, according to customs data. The decline deepened in May, when imports dropped to around 7.8 million barrels per day, down 29% year-on-year.
For the first five months of 2026, total crude imports fell 4.8% from the same period of last year. Refined fuel imports fell even more sharply, with May figures dropping 58% from a year earlier.
“When crude shipments through the Strait of Hormuz were first cut off in March, Chinese authorities ordered the independent refiners to maintain high output of gasoline and diesel even at a loss, warning that cutting utilization rates could result in their crude import quotas being slashed,” says a Beijing-based writer using the pen name All About Energy.
He says some of the loss-making “teapot” refiners were allowed to reduce output only after Beijing saw a slowdown in domestic gasoline demand.
“China’s gasoline demand has been declining since the Iran war disrupted crude shipments through the Hormuz Strait,” he says. “Rising fuel prices have discouraged driving of combustion engine vehicles, particularly in cities where electric vehicles are more convenient and cheaper to run. This year’s drop in gasoline demand is expected to exceed earlier forecasts.”
“April 2026 was a turning point,” says Xie Duiren, a Shandong-based columnist. “New energy vehicles accounted for more than 60% of domestic passenger car retail sales for the first time, with domestic brands crossing 80%. As more people choose electric vehicles, combustion-engine cars lose their residual-value protection in the second-hand market.”
He says fewer buyers and more sellers mean used car prices can only go one way, and the downward spiral has begun.
“Electric vehicles are now improving in technology and holding their value better, steadily squeezing out used combustion-engine cars, “ he says. “When a combustion-engine car goes from being an asset to a liability, who would still want to own one?”
Reuters reported on June 2 that China’s National Development and Reform Commission (NDRC) allowed some independent refiners in Shandong province to cut output from June to no lower than 80% of last year’s monthly average.
US presence in Indo-Pacific
Washington has gained significant leverage over the global energy market through two major developments this year.
In January, US special forces arrested Venezuelan President Nicolas Maduro in Caracas and flew him to New York to face drug trafficking and narco-terrorism charges. Trump said the US would run Venezuela for an unspecified period, giving Washington significant leverage over the country’s vast crude oil reserves. The end of the Iran war further extends that reach, with the Strait of Hormuz set to reopen under terms heavily shaped by Washington.
Together, the two developments give the Trump administration far greater bargaining power in the global fossil fuel market and leave it with more bandwidth to focus on the Indo-Pacific, both politically and militarily, say some Chinese analysts.
“While global attention was fixed on the Iran negotiations, reports emerged that the Trump administration was considering purchasing the Chagos Islands in the Indian Ocean from Mauritius, bypassing the United Kingdom to secure direct control of the Diego Garcia naval base,” a military affairs commentator writes in an article on Sina.com. “Diego Garcia forms the southwestern anchor of Washington’s Indo-Pacific strategy, working alongside the island chain system and India to form a multi-layered encirclement of China’s sea lanes.”
He stresses that the base, which hosts about 2,400 military and civilian personnel and supports strategic bombers and naval operations, has served as a critical logistics hub for US operations across the Indo-Pacific for decades, most recently during the Iran war.
He says China needs to stay alert and watch every move Washington makes now that the war in Iran is drawing to a close.
Official response in more detail
Chinese Foreign Ministry spokesman Lin Jian said Monday that Beijing welcomes the agreement between the US and Iran on the first-stage memorandum of understanding (MOU) and commends Pakistan’s mediation efforts. He called on both sides to sign it as scheduled on June 19, and said China is willing to work with the international community to help restore peace in the Middle East and Gulf region.
“The Strait of Hormuz is an important strait for international navigation. Restoring stability in the Strait serves the common interests of regional countries and the international community,” Lin said. “We hope the Strait will become safe again for free passage at an early date. China stands ready to maintain communication with regional countries and the international community on relevant issues.”
US President Donald Trump announced the deal after more than 100 days of military conflict with Iran, saying that the agreement with Tehran was “now complete” and authorizing the immediate removal of the US naval blockade. Pakistan and Qatar mediated the talks, and the formal signing ceremony is scheduled to take place in Geneva on June 19.
The 14-point MOU includes a permanent cessation of hostilities on all fronts, including Lebanon, the full lifting of the naval blockade within 30 days, the reopening of the Strait of Hormuz, and a suspension of sanctions on Iranian oil sales. It also calls for the release of US$24 billion in frozen Iranian assets during a 60-day negotiation period, after which a final agreement on nuclear issues is to be reached.
Read: Trump-Xi summit to weigh US energy sales amid Hormuz crisis
Follow Jeff Pao on X at @jeffpao3
