New Delhi, Feb 4 China’s strategy of importing oil at heavily discounted prices from sanctioned countries, including Venezuela, Iran and Russia, has run into trouble due to the geopolitical tensions that have now hit these countries.
Nearly 40 per cent of China’s crude imports come from Russia, Iran, and Venezuela combined. This is a significant share, especially given that these are sources associated with sanctions, political instability, and broader geopolitical risk, according to an article in The Diplomat.
Iran is in the midst of one of the largest and most widespread periods of public unrest, triggered by a deep economic crisis marked by soaring inflation and rising cost of living for the people.
The Trump administration’s removal of Venezuela’s President Nicolas Maduro and the large-scale confiscation of tankers have disrupted this source of cheap oil for China.
Venezuela has the world’s largest proven crude oil reserves, as well as an abundance of gold, diamonds, and other natural resources. As Western sanctions on Venezuela have dramatically curtailed its oil exports to the United States and Europe, the country found a reliable buyer for its crude oil in China, which has purchased up to 80 per cent of Venezuela’s oil exports in recent years at discount rates.
"Purchasing pariah state oil at discount prices benefited China considerably, helping to fuel its industrial growth strategy. Yet, with the removal of Maduro, this model now looks fragile. What began as a clever circumvention of Western sanctions is poised to become a liability for China, exposing the reality that regime risk, not supply scarcity, is now its primary energy vulnerability," states the article by Nik Foster, a non-resident fellow at the Atlantic Council's China Hub and the former deputy China adviser for USAID.
Venezuela is not the only questionable source of China’s crude. Over the years, Beijing quietly built an alternative supply system, anchored in the political isolation of pariah states, including Iran and Russia. After the invasion of Ukraine, Russian crude oil became China’s largest single source of imports. Iranian oil, responsible for about 14 per cent of China’s crude oil imports, continues to slip through global sanctions enforcement, often relabeled and rebranded as Malaysian oil. And Venezuelan oil found its way to Chinese ports by shadow tankers, sometimes labelled as crude oil from Brazil, the article further said.
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