Has the U.S. revoked Iran oil sales permits—can China benefit?

Three oil tankers were attacked as they transited the Strait of Hormuz. Immediately on July 7, the U.S. Department of the Treasury revoked Iran’s “Oil Sales General License.” As markets worried about a potential disruption to Middle East supply, oil prices surged.

Iranian oil buyers with no export license are few and far between. Can China take the opportunity to “buy on the floor”?

What is an “Oil Sales General License”?

The “Oil Sales General License” was a 60-day temporary measure that took effect on June 22. It is part of the memorandum of understanding (MOU) for the “U.S.-Iran 14-Point Temporary Agreement,” an understanding that was formally signed in mid-June by the U.S. and Iran to end the conflict. Under it, Iran allows inspectors from the International Atomic Energy Agency to enter the country in exchange for the U.S. temporarily easing restrictions on oil exports.

Now that the license has been revoked, Iran’s legal export channels are shut again. This not only blocks Iran’s exports; if Iran retaliates by fully blockading the strait, supply from other countries that need to export oil via the Strait of Hormuz would inevitably fall as well. The concern has already pushed oil prices up by 3%.

China is Iran’s most stable buyer

In the short term, China does have some “benefit.” After the license was revoked, the number of Iran’s legal buyers dropped sharply. Even the U.S. Treasury Secretary said plainly that the only remaining steady buyer of Iranian oil is China. This “single-buyer” situation greatly increases China’s bargaining power, forcing Iran to cut prices to preserve foreign-currency revenue. Reports said that from July, Iranian light crude delivered to China would be 2.5 to 5 dollars per barrel cheaper than the Brent benchmark. In addition, since January 2026 China has already settled 100% of payments in RMB, bypassing the SWIFT system and, to a certain extent, avoiding interference from U.S. financial sanctions. With buyer-market leverage, China can indeed obtain Iranian crude at a discount in the near term.

However, China’s imports of Iranian oil account for only about 10% to 15% of its total import volume. Although it is the third-largest source of supply for China, it is far less than Russia and Saudi Arabia. What truly affects China’s overall import costs is the broad rise in international oil prices. Revoking the license triggers market panic over a supply disruption, which could keep oil prices elevated. As the world’s largest oil importer, every $1 increase in oil prices means China must pay an additional several billion dollars per year. Even the few dollars per barrel discount gained from Iran cannot offset the massive gap created by the overall surge in import costs.

Blockade in the Strait harms the world

The more lethal risk lies in the U.S.’s practical maritime blockade. The U.S. actions are not limited to financial sanctions; they also involve intercepting Iranian tankers. Under the blockade, Iran’s oil exports in May have already crashed to a six-year low of only 209k barrels per day. Analysts warn that if the blockade continues, Iran’s export inventory to China could be exhausted within two months. At that point, even if China is willing to buy, Iran would have no oil to sell. In addition, more than 58M barrels of Iranian crude are floating at sea, and over 90% of the cargoes have no clear buyers, reflecting limited market ability to absorb supply. China’s own refineries also face weak demand and margin pressure, making it impossible to absorb indefinitely.

In sum, when the U.S. revokes the license, China’s bargaining power in oil trading does increase—allowing it to buy Iranian crude at lower prices, and RMB settlement further strengthens financial autonomy. But this “benefit” is extremely limited and unstable. The systematic risks of rising global oil prices driving up overall import costs, combined with the U.S. maritime blockade that could interrupt Iranian supply, are far more decisive than short-term price discounts. So if you say China is “benefiting,” it’s probably only seeing the trees but not the forest.