Beijing’s Pragmatic Influence Over Iran and the Oil Trade

China has joined Pakistan in proposing a five-point peace plan intended to secure a ceasefire and reopen the Strait of Hormuz, as the conflict between Iran, the United States and Israel enters its second month. The diplomatic push comes as Beijing seeks to mitigate the impact of the war on global energy supplies and oil prices.

The diplomatic initiative was developed after Pakistan’s foreign minister traveled to Beijing to request Chinese support for negotiations. Officials in Beijing and Islamabad have since presented the plan to advocate for peace, with China providing what analysts describe as comprehensive political and diplomatic support for Pakistan’s role as a mediator.

Origins of the Conflict

The current escalation began on February 28, 2026, when the United States and Israel launched wide-ranging military strikes against Iran. The conflict is rooted in long-standing confrontations regarding Iran’s missile capabilities, regional activities, and nuclear program.

U.S. President Donald Trump has stated that American military action in Iran could conclude within two to three weeks, though the specific mechanism for that conclusion remains unclear. The warfare has significantly disrupted the Strait of Hormuz, a critical maritime chokepoint through which approximately one-fifth of the global oil trade typically flows.

China’s Energy Vulnerabilities

Beijing’s transition from a muted response to an active peacemaking role is driven largely by its dependence on Iranian energy. In 2025, China emerged as the primary buyer of Iranian crude, importing more than 80% of Iran’s oil exports. According to data from Kpler, this amounted to approximately 1.38 million barrels per day, representing roughly 13% to 14% of China’s total seaborne crude imports.

The financial incentive for this arrangement is significant, as Iranian crude typically trades at a discount of $8 to $10 per barrel below global benchmarks. These discounted rates are particularly attractive to independent refiners, known as teapots, which are concentrated in China’s Shandong province and operate on narrow profit margins.

To avoid the risks associated with U.S. Sanctions, large state-owned Chinese oil companies have generally avoided direct imports since 2018 or 2019. Instead, Iranian oil is often relabeled or transshipped through countries including Indonesia and Malaysia to bypass restrictions.

Pragmatism Over Strategic Alliance

While some observers view the war as a front in the strategic competition between Washington and Beijing, evidence suggests the China-Iran relationship is more pragmatic than strategic. Iran serves as a vital energy supplier and trade partner during periods of Western sanctions, but the two nations do not operate as formal allies.

This pragmatic approach has led to a cautious diplomatic stance. Foreign Minister Wang Yi has offered rhetorical support to countries targeted by Iran, reflecting Beijing’s concerns that Iranian actions could interrupt the very energy exports China relies upon.

In reality, the relationship has been more pragmatic than strategic. Iran has been an important supplier of energy to China and a useful trade partner during periods of Western sanctions.

The Cairo Review of Global Affairs

Geopolitical Implications

China’s entry into the mediation process occurs ahead of scheduled trade talks next month between President Xi Jinping and President Donald Trump. By positioning itself as a peacemaker, Beijing aims to balance its need for affordable energy with the necessity of navigating international pressure and U.S. Enforcement actions.

The current crisis exposes China to significant geopolitical shocks. Any prolonged conflict in the Middle East or a further tightening of sanctions threatens to disrupt refinery operations in Shandong and undermine China’s broader energy security strategy of securing low-cost, alternative sources in politically sensitive regions.

Washington has urged major energy importers, including China, to contribute to efforts to secure shipping through the Strait of Hormuz, highlighting the intersection of global energy security and the ongoing military conflict.