Venezuela and Iran.. Is Trump Targeting the Arteries of Cheap Oil for China?

SadaNews - Washington's recent pressure on the Venezuelan oil sector and its new escalation against Iran has raised a fundamental question in energy markets regarding the true intent of these policies.

The question arises whether the US actions aim solely to choke the sanctioned producers or are practically seeking to raise the cost of energy for China by cutting off supplies of cheap oil.

Reports from Reuters have shown that the mechanisms for enforcing sanctions employed by the US have been designed in a way that allows for disrupting China's access to sanctioned oil, either through direct pressure on producers or by targeting shipping routes and contracts.

However, determining the political intent is more complex than just assessing the economic impact. Various American officials and advisors have indicated that the objectives intertwine between deterrence in the Western Hemisphere, the implementation of sanctions, strategical messaging, and including the benefit that China gains from discounted prices within an increasingly targeted scope.

Venezuela.. A Message to Beijing

The economic network CNN, quoting American sources, reported that one of the declared objectives of the US operation executed on January 3, 2026, which led to control over the Venezuelan leadership, is to send a direct message to China urging it to steer clear of the Americas.

American officials justified this by stating that the stage of Beijing acquiring cheap oil through debt leverage must come to an end.

In turn, The Independent covered the same development as a direct pressure test on China's reliance on sanctioned oil.

The report relied on data issued by Kpler, a company specializing in global trade and commodity data analysis, which showed that sanctioned oil reached a record level of nearly 15% of global supplies.

The data indicated that China was importing about a third of its oil imports from Iran, Russia, and Venezuela combined.

The redirection of Venezuelan crude, which was reaching Chinese ports via gray market routes towards more formal channels, particularly Gulf Coast refineries in the US, deprived China of an important source of cheaper heavy oils.

This shift forced Chinese refineries to seek alternatives either from other crudes or through other suppliers subject to sanctions as well.

The Independent noted that around 500,000 barrels daily that China was absorbing from Venezuelan oil are now likely directed towards Gulf Coast refineries in the US, leading to a reduction in the price discount that Beijing was benefiting from.

What Was China Paying?

The Independent quoted Argus Media, a specialist in energy market pricing, stating that China saved about $9 per barrel on Venezuelan oil shipments delivered in November compared to similar heavy Canadian crude.

Argus Media provided more detailed pricing information, clarifying that January shipments of Venezuelan Mere crude designated for delivery to Chinese ports were offered at a discount ranging from $10 to $12 per barrel compared to Brent crude contracts. These shipments were sold before the US takeover of Venezuelan crude sales.

Data showed that at least one shipment was offered after the raid at a steep discount, with a minimum price of around $30 per barrel.

Additionally, Reuters indicated in a report published in December 2025 that discounts on Mere crude shipments heading to China widened to about $21 per barrel below Brent price, attributing this to increased risks and the inclusion of war-related costs in shipping contracts.

These figures collectively supported the fundamental economic incentive as Chinese refineries, especially smaller ones sensitive to profit margins, benefited directly from sanctioned oil as long as discounts remained wide and logistical routes manageable.

Hidden Routes.. How Does the Flow Continue?

Specialized media coverage has shown that evasion patterns have been repeated through multiple tools, including ship-to-ship transfers, turning off or changing automatic identification system signals, frequently changing ship flags, and reclassifying the origin of shipments via intermediaries.

The German Broadcasting Corporation reported that Iran relied on what is known as the shadow fleet, and reports indicated that shipments were often reclassified as originating from other countries.

In the Venezuelan context, Reuters noted that tankers under sanctions have sailed in dark mode to reduce interception risks by turning off their transponders.

Lloyd's List, specialized in maritime shipping issues, documented what it termed "fraud" and redirection practices among tankers linked to Venezuelan trade, in addition to the state of confusion that followed US enforcement actions.

This aspect gained central importance as it showed that any tightening targeting the entire logistics service chain, from tankers and flags to insurance companies and intermediaries, can raise the total cost for China even if the traded quantities do not collapse immediately.

Iran.. Tariffs and Pressure

The latest escalation against Iran manifested in President Donald Trump's announcement on January 13, 2026, of a 25% tariff on any country conducting trade with Iran, effective immediately. This step placed China at the center of the targeting as it is the primary buyer of Iranian oil.

Data from Kpler analytics revealed that China purchases nearly 80% of Iranian oil transported via shipping, which has few buyers due to US sanctions.

The company added that China imported an average of 1.38 million barrels per day of Iranian oil last year, representing about 13.4% of a total of 10.27 million barrels per day of oil imported via sea.

Moreover, the German Broadcasting Corporation highlighted the debate among economists about the feasibility and validity of implementing these measures. It quoted Wendy Cutler, former US trade advisor, warning that this step reveals the fragility of any trade truce between the US and China.

It also quoted criticisms from Maurice Obstfeld, former chief economist at the International Monetary Fund, who described the measure as self-harming to the US economy and unlikely to change Iran’s behavior.

These opinions supported a negatively inclined assessment, as the tool appeared crude, economically costly, and strategically escalatory, even if intended to push China to weigh cheap oil against broader risks to its trade.

Beijing rejects unilateral sanctions and defends its trade with Iran as legitimate.

China has criticized Trump's decision, threatening to take "all necessary measures" to protect its interests.

Typically, traders classify Iranian oil imported by China as coming from other countries. Chinese customs data has not shown any oil shipped from Iran since July 2022, according to Reuters.

A Self-Eating Discount

Reports from Reuters and analyses from energy pricing institutions have shown that the combination of US policies has not primarily targeted reducing the flows of sanctioned oil but rather focused on dismantling the price discount that China benefited from.

Data from Argus Media specializing in energy market pricing indicated that the nominal discount on Venezuelan Mere crude ranged from about $9 to $21 per barrel compared to similar heavy crudes, yet this discount began to practically fade when indirect cost elements were factored into the economic calculus.

Additionally, Reuters reports indicated that the seizure of tankers, the stranding of more than 11 million barrels on stuck ships, and the inclusion of war-related risk clauses in shipping contracts cumulatively raised the total cost of barrels headed to China.

A Bloomberg analysis added that lengthy wait times, rising indirect insurance premiums, the costs of redirecting ships, and the complexity of financial settlements in the gray market consumed an increasing part of the nominal discount.

Meanwhile, Lloyd's List observed the expanding use of shadow fleets for concealment methods, turning off tracking systems, and changing routes, which decreased the reliability of deliveries and raised the operational risk premium.

All these factors collectively turned the price discount from direct cash savings into a margin consumed in covering risks and operational frictions, prompting some Chinese refineries - according to Bloomberg - to reevaluate their purchasing strategies, as reduced oil lost its economic attractiveness when its risks became inaccurately priced.