Oil, gas and Iran economic analyst
China is showing growing unease over the economic and strategic costs of Iran’s confrontation with the United States, even as it continues to shield Tehran diplomatically at the United Nations.
US President Donald Trump said during his recent visit to Beijing that Chinese President Xi Jinping stressed the importance of keeping the Strait of Hormuz open.
China’s foreign ministry has also repeatedly called for the Strait of Hormuz to reopen “as soon as possible” and urged a “comprehensive and lasting ceasefire” between Iran and the United States.
Before the closure of the Strait of Hormuz, roughly 45 percent of China’s oil imports passed through the strategic waterway.
As Brent crude futures surged to $117 per barrel and physical oil cargoes traded at prices as high as $150, China responded by cutting oil imports by 20 percent last month and raising domestic gasoline and diesel prices on May 9.
Reuters reported that China’s producer prices climbed to a 45-month high in April, while consumer inflation also accelerated.
But the damage to China’s economy goes far beyond energy supplies.
Although Beijing has yet to release customs data for April, March figures already point to a sharp collapse in Chinese exports to the region.
According to Chinese customs statistics, exports to Persian Gulf countries fell to just $5.7 billion during March—the first month of Iran’s blockade of the Strait of Hormuz—down from $13.2 billion the previous month.
In other words, Chinese exports to the Persian Gulf region plunged by 57 percent within a single month.
These figures represent only part of the economic fallout facing China. Chinese companies implemented or invested in approximately $39.4 billion worth of projects across the Middle East last year.
But with the region sliding deeper into conflict and Iran launching extensive attacks against its Arab neighbours, many of Beijing’s regional investments are facing growing uncertainty.
Expectations among those states that China should pressure Tehran should not be underestimated. China exported roughly $340 billion worth of goods to Iran’s Arab neighbours. That’s roughly equivalent to the entire size of Iran’s economy.
Beijing cannot simply ignore the concerns of its wealthy regional partners.
One potential lever available to China may be reducing purchases of Iranian crude. Data from Kpler shows that despite strong demand, China cut imports of Iranian oil by nearly one-third in April compared to March, reducing purchases to 1.16 million barrels per day.
China also remains Iran’s largest non-oil trading partner.
Beijing has nevertheless continued to back Tehran diplomatically. China and Russia opposed recent US-backed UN resolutions on the Strait of Hormuz, arguing the measures were one-sided and risked fueling further escalation.
China’s UN envoy Fu Gong said the proposed resolution was “not helpful” and argued that both its timing and content were wrong.
Still, Iran continues to serve as an important strategic card for Beijing in its broader rivalry with the West. But despite the growing economic costs, China is unlikely to support any outcome that would leave Tehran strategically defeated by Washington.
The accounts describe growing frustration over restricted access to subsidized gasoline and arbitrary limits imposed by operators, leaving many motorists dependent on costly unofficial sales.
“One day there’s quota left on your card, the next day it says your quota is finished,” one citizen said. “They even steal the few drops of gasoline they give people.”
Iran uses a subsidized fuel quota system controlled through electronic fuel cards. Every private vehicle receives a monthly gasoline allocation at discounted prices, while extra consumption is charged at higher rates.
Under Iran’s latest pricing system introduced in late 2025, the first 60 liters of gasoline each month cost 15,000 rials per liter (about $0.008), the next 100 liters cost 30,000 rials ($0.017), and any amount above 160 liters costs 50,000 rials ($0.028).
Despite heavy fuel subsidies, Iran’s minimum monthly wage is now worth less than $90 because of inflation and the sharp decline of the rial.
Another driver said he could not use his personal fuel card on Wednesday because his monthly allocation had already run out. The station operator, he said, agreed to provide a fuel card only if payment was handed directly to him, and even then limited sales to 15 liters at 70,000 rials ($0.038) per liter.
President Masoud Pezeshkian said in late April that the country faced “some shortages” in sectors including energy and fuel.
On May 9, Esmail Saghab Esfahani, vice president and head of Iran’s Strategic Energy Policy and Management Organization, said damage during the war had affected parts of the country’s gas and fuel infrastructure and disrupted some gasoline production capacity.
He said Iran had “no choice but to conserve” fuel consumption for at least the next 18 to 24 months.
But Oil Minister Mohsen Paknejad said on April 29 there were no concerns over fuel supply or distribution.
Black market prices rise
A resident of Bandar Abbas in southern Iran said drivers often wait more than an hour at gas stations, even with personal fuel cards, while gasoline is “widely available” on the black market at 150,000 rials, about $0.08, per liter.
In Zahedan, in southeastern Iran, one resident said gasoline shortages and tighter controls had accelerated illegal fuel sales.
“Everything has been left without oversight,” the resident said. “Sometimes 20 liters of gasoline is sold on the street for 10 million rials ($5.5).”
One driver from Isfahan said operators demanded between 1 million rials ($0.55) and 4 million rials ($2.22) to provide access to only 15 liters.
Citizens also described growing congestion at gas stations nationwide, with drivers saying some stations on major routes had limited purchases to 15 liters.
A resident of Sistan and Baluchestan said 70 liters of gasoline now costs around 50 million rials, about $28, while many villagers must drive hundreds of kilometers to reach hospitals or provincial centers.
For many Iranians, the shortages have become less a matter of conservation than another daily pressure in an increasingly strained economy.
