Trump Allows China to Resume Iranian Oil Purchases Amid Complex Geopolitics

U.S. President Donald Trump announced a significant shift in policy, stating that China is now permitted to continue purchasing oil from Iran. This declaration was made through a post on Trump's social media platform, Truth Social, and came amidst ongoing diplomatic efforts related to the Israel-Iran conflict. Trump's statement not only acknowledged China's ability to resume Iranian oil imports but also expressed a hope that Beijing would increase its oil imports from the United States.

Trump's announcement underscores the complex geopolitical dynamics at play, particularly given China's historical support for Iran. Beijing has been a steadfast political ally of Tehran, a relationship that has been fortified through various economic and strategic agreements. Notably, in 2021, China and Iran signed a 25-year cooperation deal, though the full details of this agreement remain undisclosed. This partnership has seen significant investments by Chinese state-owned enterprises in Iran's energy sector, including the development of the South Pars gas field and the North Azadegan oil field.

The South Pars gas field, for instance, saw China National Petroleum Corp (CNPC) sign a $4.8 billion deal with France's Total in 2016 to develop the offshore field in collaboration with an Iranian state firm. CNPC's 30% stake in the project was valued at around $600 million. However, due to U.S. pressure, CNPC withdrew from the project in 2019. Additionally, CNPC had signed a deal in 2009 to develop the North Azadegan oil field, with the first phase valued at about $2 billion. The first cargo of 2 million barrels was shipped to China in 2016.

Beyond the energy sector, China has also made substantial investments in Iran's infrastructure. In 2018, China National Machinery Industry Corporation signed a 5.3 billion yuan ($738 million) deal to expand and renovate a railway connecting Tehran with western Iran. That same year, a subsidiary of the corporation secured a contract worth 3.5 billion yuan for a 263-km railway project in western Iran. Furthermore, in 2017, China's Metallurgical Corporation (MCC) invested around $350 million in the Sepid Dasht steel plant and won a design contract for a pelletizing project.

Trump's announcement comes at a time when China is the largest importer of Iranian oil, with Beijing reportedly purchasing more than 90% of Iran's oil exports. This dependency on Iranian crude highlights the strategic importance of the relationship between the two countries. However, Trump's hope that China will also increase its oil imports from the United States adds a layer of complexity to the geopolitical landscape. It remains to be seen how Beijing will navigate this delicate balance, given its longstanding support for Iran and the potential economic benefits of diversifying its oil imports.