China's Iranian oil imports hit record high amid signs of sanctions shift

China’s imports of Iranian crude oil surged to record levels in June, as Tehran boosted shipments ahead of the recent conflict with Israel and Chinese independent refiners rushed to lock in discounted barrels amid tightening global supplies. According to data from ship-tracking firms Vortexa and Kpler, China imported an estimated 1.8 million barrels per day (bpd) of Iranian oil between June 1 and June 20. By June 27, the rolling average had eased slightly to 1.46 million bpd, still sharply higher than May’s 1 million bpd. The surge followed a spike in Iranian loadings in May, which rose to 1.83 million bpd, the highest level in several years.

These volumes were driven by Iran’s effort to expedite exports in anticipation of further escalation in its conflict with Israel and possible disruptions in the Strait of Hormuz. Most of the crude was absorbed by China’s so-called “teapot” refineries, smaller independent operators with growing demand and declining inventories ahead of the peak summer consumption season.

Iran’s exports peaked at 2.2 million bpd in mid-June but tapered off to 1.5 million bpd in the latter half of the month, following Israeli airstrikes on June 13. Analysts at Petro-Logistics confirmed a notable decline in loadings after the attacks, suggesting short-term supply volatility from OPEC’s third-largest producer could tighten global oil markets.

Sanctions confusion and US signals shift in strategy

The jump in Iranian shipments also coincides with mounting speculation over a potential easing of US sanctions. President Donald Trump, who had reinstated his “maximum pressure” policy earlier this year, said last week, “China can now continue to purchase oil from Iran. Hopefully, they will be purchasing plenty from the US, also.” The statement sparked confusion about whether Washington is softening enforcement.

While the White House later clarified that sanctions remain in place, Trump’s comments were widely interpreted as an attempt to leverage China’s energy needs into broader trade concessions. Meanwhile, reports indicate the US is offering Iran a potential $30 billion package in nuclear energy development and sanctions relief in exchange for halting uranium enrichment, an offer Tehran has not accepted.

Oil prices retreat as geopolitical premium fades

Amid easing West Asian tensions, an increase in Iranian oil flows and ongoing OPEC+ production hikes, oil prices declined on June 30. Brent crude futures dropped 66 cents, or 0.97 per cent, to $67.11 per barrel ahead of the August contract expiry. The more active September contract slipped to $65.97. West Texas Intermediate (WTI) fell by 94 cents to $64.58 per barrel.

Analysts attributed the dip to the market pricing out the geopolitical risk premium that had briefly pushed Brent above $80 during the 12-day Iran-Israel war. A ceasefire announced by Trump helped cool the market, while news that OPEC+ is preparing a fifth consecutive production increase—adding another 411,000 bpd in August—has further weighed on sentiment. Still, oil benchmarks are expected to post their second consecutive monthly gain of over 5 per cent, reflecting lingering tightness in global supply despite the short-term correction.