China now buys nearly every drop of oil Iran produces. A decade ago, it purchased roughly 30% of Iranian crude. Today that figure stands at around 90%, making Beijing the indispensable partner keeping Tehran’s economy afloat and its military funded — despite years of escalating U.S. sanctions.
According to commodity research firm Kpler, China purchased approximately 1.4 million barrels per day of Iranian oil in 2025. That is more than double the roughly 650,000 barrels per day it bought in 2017, before the first Trump administration launched its “maximum pressure” campaign. At current oil prices, these purchases channel billions of dollars to Iran every month.
From Maximum Pressure to Maximum Evasion#
When Trump first imposed his toughest sanctions in 2018, Iranian exports collapsed from nearly 2.8 million barrels per day to just 200,000 by August 2019, as buyers worldwide fled the market. But Iran quickly adapted — with Chinese help.
The key was China’s network of smaller, independent refineries known as “teapots.” After state-owned giants like Sinopec and CNPC pulled back to protect their global operations from U.S. penalties, these teapot refineries filled the gap. They had less international exposure and could pay in yuan rather than dollars, insulating them from American financial reach. Beijing facilitated this shift by nearly doubling the teapots’ crude import quotas, from 140 million metric tons in 2018 to 257 million this year.
A Shadow Fleet on the High Seas#
Moving sanctioned oil across thousands of kilometers of ocean requires creative deception. A sprawling shadow fleet of tankers has emerged to handle the trade, employing tactics straight out of a spy thriller.
Vessel operators change ship names, disable tracking transponders, and transmit fake location signals to disguise their movements. Ship-to-ship transfers at sea allow Iranian crude to be relabeled as originating from Oman, Malaysia, or other countries. One China-based tanker network alone, established in 2019, now comprises at least 56 vessels that have moved more than 400 million barrels of sanctioned oil, according to C4ADS, a Washington-based nonprofit focused on national security threats.
In one case described in U.S. court documents, a ship called the “Oman Pride” loaded Iranian crude at Sirri Island in the Persian Gulf while another vessel elsewhere transmitted fake signals pretending to be that same ship — a textbook case of maritime identity fraud.
Following the Money#
Financing the trade has required equally inventive methods. Bank of Kunlun, a small Chinese institution sanctioned by Washington in 2012 for facilitating Iranian financial transactions, became a primary conduit for yuan-denominated payments. Cut off from the U.S. financial system, the bank had nothing more to lose — and it grew rapidly as Iran’s oil revenues flowed through its accounts.
An elaborate network of front companies further obscures the money trail. U.S. prosecutors have alleged that buyers sometimes dealt directly with Iran’s Islamic Revolutionary Guard Corps through shell companies. Udi Levy, the former head of the Mossad’s economic warfare unit, has documented 66 front companies in Hong Kong and mainland China operating under Bank Tejarat, a major Iranian financial institution, to convert yuan into dollars and euros.
Beyond conventional payments, China and Iran have developed a barter system in which Chinese state-backed companies build infrastructure in Iran as compensation for oil. This channel alone handled up to $8.4 billion in payments in 2024, according to the Wall Street Journal.
Why This Matters for Israel#
The revenue flowing from this trade directly funds the military capabilities that threaten Israel. Iran uses oil income to develop ballistic missiles, manufacture drones, and finance proxy forces across the region. As Max Meizlish of the Foundation for Defense of Democracies put it: “Iran just wouldn’t be able to fight this war without the years of support that it has received from China.”
The second Trump administration faces a familiar challenge: tightening enforcement without disrupting global oil markets or pushing U.S.-China relations past a breaking point. Meanwhile, the sanctions-evasion infrastructure has only grown more sophisticated and entrenched.
China’s Foreign Ministry has said it “firmly opposes illegal and unreasonable unilateral sanctions” and will protect its energy security. Officially, Chinese customs authorities have not reported any crude imports from Iran since 2023 — even as satellite tracking shows a steady stream of tankers making the journey.
Source: The Wall Street Journal
