Following the weekend announcement of a US-Iran peace agreement, Beijing has formally welcomed the deal, pinning hopes that the planned reopening of the Strait of Hormuz will resolve months of oil supply disruptions that have roiled China’s domestic fuel markets and strained its refining industry. But behind official statements, Chinese policy and energy commentators have voiced a far more nuanced, uneven set of perspectives on what the deal means for the world’s largest crude importer.
On one hand, analysts broadly agree that the reopening of the critical Strait of Hormuz will open new opportunities for China: it will be able to replenish depleted strategic crude reserves, while lower global oil prices will ease widespread cost pressures across the economy. Even some independent Chinese “teapot” refiners that have faced US sanctions over Iranian crude imports could see some relief from the diplomatic thaw.
On the other hand, the deal also strips away the unique advantages China carved out during years of sanctions on Tehran. For years, China bought discounted Iranian crude via a shadow fleet operating outside formal sanctions frameworks, a benefit that will disappear once Western governments unfreeze Iranian assets and allow Tehran to resume legal crude exports to the global market.
As Sichuan-based commentator Fanyuzhi, a pseudonymous columnist, put it: the US-Iran detente and resulting lower oil prices are a double-edged sword for China. In the near term, softer crude costs will cut logistics expenses across all sectors and help tame persistent domestic inflation. Over the longer horizon, however, cheap fossil fuels could slow China’s aggressive push to scale up renewable energy and electric vehicles, while erasing the privileged, exclusive access China built with Iran during the sanctions era. Once Tehran fully reopens its oil sector to global markets, Fanyuzhi noted, energy firms from Europe, Japan and South Korea will quickly reenter the market to compete for the crude supplies China previously secured largely on its own.
Even with these downsides, Fanyuzhi acknowledged that a more stable Middle East aligns with China’s long-term geopolitical goals through its Belt and Road Initiative. Beijing brokered the landmark 2023 Saudi-Iran detente and played an unpublicized behind-the-scenes role in recent US-Iran talks, a track record that has clearly boosted China’s regional influence. More Middle Eastern nations are now increasingly leaning toward Beijing when balancing their relationships with major global powers, he added. Still, he cautioned against overestimating the durability of the new peace deal, comparing it to two exhausted boxers taking a mandated break between rounds: hostilities could easily reignite once both sides have regained their strength.
The months-long conflict between the US and Iran, which began on February 28, has hit China’s gasoline market on two separate fronts, according to regional media. Disruptions to crude shipments through the Strait of Hormuz drove up global crude price expectations, squeezing profit margins for Chinese refiners of all sizes. At the same time, persistent fuel price volatility accelerated a already ongoing shift toward electric vehicles among Chinese consumers, eroding domestic gasoline demand and piling enormous pressure on independent “teapot” refiners to cut production.
While additional US sanctions targeting some teapot refiners added to industry stress, the impact was less severe than many analysts initially predicted, thanks to China’s large holdings of strategic crude reserves that allowed Beijing to stabilize domestic fuel supplies without over-reliance on sanctioned imports.
Customs data bears out the scope of the supply shock: China’s crude oil imports fell 20% year-on-year in April 2026 to 9.25 million barrels per day, the lowest monthly volume since July 2022. The decline deepened in May, when imports dropped to roughly 7.8 million barrels per day, a 29% year-on-year drop. For the first five months of 2026, total crude imports are down 4.8% from the same period in 2025, while refined fuel imports have plummeted even faster, with May volumes falling 58% year-on-year.
“When crude shipments through the Strait of Hormuz were first halted in March, Chinese regulators ordered independent refiners to maintain high output of gasoline and diesel even if it meant operating at a loss, warning that any cuts to capacity utilization could result in reduced crude import quotas,” explained All About Energy, a pseudonymous Beijing-based energy analyst. It was only after Beijing observed a clear slowdown in domestic gasoline demand that loss-making teapot refiners were permitted to scale back output, he added.
“China’s gasoline demand has been declining steadily since the Iran war disrupted Hormuz crude shipments,” All About Energy said. “Rising fuel prices have discouraged driving of combustion engine vehicles, particularly in Chinese cities where electric vehicles are already more convenient and cheaper to operate. This year’s drop in gasoline demand is now on track to exceed earlier industry forecasts.”
Shandong-based columnist Xie Duiren noted that April 2026 marked a major turning point in China’s transition away from gasoline-powered vehicles: for the first time, new energy vehicles made up more than 60% of all domestic passenger car retail sales, with Chinese domestic brands capturing more than 80% of that new energy market. As more consumers shift to EVs, gasoline-powered cars have lost their residual value protection in the second-hand market, creating a downward price spiral.
“Electric vehicles are improving rapidly in technology and holding their value far better than they did even two years ago, steadily crowding out used combustion-engine cars from the market,” Xie said. “Once a gasoline-powered car goes from being an asset to a financial liability, there is little incentive for consumers to hold onto one.”
On June 2, Reuters reported that China’s National Development and Reform Commission, the country’s top economic planner, had authorized independent refiners in Shandong – China’s top refining hub – to cut output starting in June, capping production at no lower than 80% of 2025’s monthly average.
Chinese analysts also point out that the end of the Iran war has significantly expanded Washington’s leverage over global energy markets, giving the Trump administration more room to refocus its political and military attention on the Indo-Pacific. Earlier this year, US special forces arrested Venezuelan President Nicolas Maduro in Caracas and flew him to New York to face drug trafficking and narco-terrorism charges, with the Trump administration announcing it would oversee Venezuelan operations for an indefinite period, giving Washington direct control over the country’s massive crude reserves. The end of the Iran war and the reopening of the Strait of Hormuz on terms heavily shaped by Washington extends that dominance further.
One military affairs commentator writing for Chinese portal Sina.com noted that while global attention was fixed on the Iran negotiations, reports emerged that the Trump administration was in talks to purchase the Chagos Islands from Mauritius, bypassing the United Kingdom to secure direct control of the strategic Diego Garcia naval base. Diego Garcia forms the southwestern anchor of Washington’s Indo-Pacific strategy, working alongside the US’s island chain alliance network and India to create a multi-layered defense network that can constrain China’s commercial and military sea lanes, the commentator said. The base, which hosts roughly 2,400 military and civilian personnel and supports strategic bomber operations and large-scale naval deployments, has served as a critical logistics hub for US operations across the Indo-Pacific for decades, including most recently during the Iran war. With the Iran conflict wrapping up, the commentator stressed, China must remain vigilant and closely monitor every shift in Washington’s regional strategy.
In Beijing’s official response to the deal, Chinese Foreign Ministry spokesman Lin Jian said Monday that Beijing welcomes the first-stage memorandum of understanding between Washington and Tehran, and commended Pakistan’s mediation efforts. Lin called on both sides to complete the formal signing as scheduled on June 19, and said China stands ready to work with the international community to support long-term peace and stability in the Middle East and Gulf region.
“The Strait of Hormuz is a critical waterway for international navigation. Restoring stability in the Strait serves the common interests of all regional states and the entire global community,” Lin said. “We hope the Strait will once again be open and safe for free navigation at an early date. China stands ready to maintain close communication with regional countries and the broader international community on all relevant issues.”
US President Donald Trump announced the deal after more than 100 days of open military conflict with Iran, saying the agreement with Tehran was “now complete” and ordering the immediate lifting of the US naval blockade on Iranian ports. Pakistan and Qatar co-mediated the negotiations, with a formal signing ceremony scheduled for Geneva on June 19.
The 14-point first-stage MOU outlines a permanent ceasefire across all active fronts including Lebanon, the full lifting of the naval blockade within 30 days, the full reopening of the Strait of Hormuz, and a temporary suspension of sanctions on Iranian oil exports. It also includes a plan to release $24 billion in frozen Iranian assets over a 60-day negotiation period, after which a final permanent agreement covering Iran’s nuclear program will be finalized.