While the latest missile and drone strikes launched by Iran against Israel have reignited calls in the US to tighten sanctions, President Joe Biden faces constraints in dramatically curbing Iran's oil exports due to worries over high energy prices and angering key trade partner China.
Iran has relied heavily on its oil exports to prop up its economy despite strict US sanctions. According to industry sources, China has emerged as the largest buyer of Iranian crude, importing over 1 million barrels daily – accounting for 90% of Iran's exports and meeting 10% of China's demand.
However, shipping data indicates much of this trade occurs under the radar through indirect routes and ship-to-ship transfers that obscure the origin of the oil. If the US were to take tough measures against Chinese entities involved, it could damage their wider economic relationship still recovering from recent tensions.
With midterm elections looming where high gas prices remain a concern, the White House is wary of sanctions risks that could boost market costs further. While some move against sanctions evaders is expected to placate calls for a stronger response, rapid steps to choke off Iranian supply appear unlikely given the geopolitical factors involved. As long as China continues banking on Iranian oil, the strategic dynamic leaves Tehran's energy sector largely insulated despite periodic flashpoints with adversaries like Israel.
