China keeps Mideast oil flowing despite Houthi attacks, U.S. blockade

Chinese tankers broadcast ‘Chinese crew and owner’ for safe passage

China has kept oil imports from the Middle East flowing during the Iran conflict by leveraging its relationships with Iran and Iran-backed Houthi rebels, allowing it to bypass blockades at two strategic shipping chokepoints, according to shipping data and analysts.

The maneuvers illustrate how Beijing’s dual role as a financial lifeline to Iran and a major customer for Iran’s Saudi rivals provides unique access to oil despite wartime disruptions that have roiled global markets.

Iran-backed Houthis in Yemen began attacking Saudi-linked oil tankers at the Bab al-Mandeb strait last week, expanding the Iran conflict and disrupting a Red Sea route Saudi Arabia has used to bypass the Strait of Hormuz and deliver oil to Asian customers. But the rebels gave safe passage to two Chinese oil tankers carrying Saudi oil through the strait, according to the Wall Street Journal. Both ships broadcast “Chinese crew and owner” as they sailed.

At least two more China-bound supertankers loaded with Saudi crude — the New Explorer and New Pearl, both Hong Kong-flagged — have since cleared the Bab al-Mandeb, the Journal reported, citing maritime traffic data. The Houthis previously established an application system allowing selective passage; ships would email the rebels requesting permission several days in advance, crew members and analysts said.

Across the Arabian Peninsula at the Strait of Hormuz, a U.S. naval blockade and the threat of Iranian attack have impeded tanker transit. China has continued importing Iranian oil by drawing on a floating reserve off Malaysia, an established channel that circumvents U.S. sanctions, according to the Journal. Tankers from Iran unload oil to vessels that continue onward to China.

Iranian oil arriving in China declined from a high of 1.7 million barrels per day in March, before the U.S. blockade began, to 785,000 barrels per day in June and 523,000 in July, according to data from commodity research firm Kpler. Despite the volume decline, Iran’s share of China’s total crude imports climbed to more than 24% in May and 18% in June, compared with 15% in February, according to ship-tracking company Vortexa. China has officially logged no imports of Iranian oil since 2022.

Iran used a monthlong pause in the U.S. blockade — which resumed in mid-July — to rush out oil exports, exporting an estimated $5 billion to $6 billion in oil, analysts said. One Iranian tanker, the Humanity, arrived off Malaysia over the weekend, according to ship-tracking data and United Against Iran, a U.S.-based advocacy group.

China buys about 90% of Iran’s oil exports, helping Tehran endure sanctions, but also buys oil from Saudi Arabia, a rival to Iran. Before the war, almost half of China’s crude oil imports passed through the Strait of Hormuz.

“Fuel security is a major geopolitical lever, and China has historically been in a vulnerable position as a big importer, but they’ve gone to great lengths to reduce that vulnerability,” said Saul Kavonic, head of energy research at MST Financial, a Sydney-based financial services firm. Iran’s continued influence in Hormuz “strengthens the hand of China with regard to that geopolitical leverage,” Kavonic said.

The strategy has limits. In May, Iran struck the Marshall Islands-flagged tanker JV Innovation despite its Chinese owner and mostly Chinese crew, triggering a fire on deck, the Journal reported.

Beijing said it was “deeply concerned” about vessels and crews stranded in the strait and called for restoring unimpeded passage, but has done little to rein in Iran and has provided it with diplomatic support, the Journal reported.