A new Congressional investigation has uncovered that China is purchasing tens of millions of barrels of sanctioned oil from Iran, Russia, and Venezuela at discounted rates, using a 'shadow fleet' of tankers to evade U.S. sanctions and Western maritime laws [1]. The House Select Committee on China released a report detailing that sanctioned oil accounted for one-fifth of China's total oil imports, positioning China as the buyer of last resort for these regimes and enabling it to build a substantial strategic petroleum reserve [1].
According to the report, China assembled a strategic petroleum reserve of approximately 1.2 billion barrels by early 2026, which equates to about 109 days of seaborne import cover, all acquired at below-market prices from oil intended to be stranded by Western sanctions [1]. The report also highlighted that China relies on foreign suppliers for roughly 70% of its oil, much of which is delivered via sea routes vulnerable to blockade during geopolitical crises, such as a potential Taiwan contingency. This vulnerability has prompted Chinese leaders to prioritize energy security as an 'urgent requirement in great-power competition' [1].
The report cited data from Kpler, a commodity data and analytics firm, indicating that shadow fleet and sanctioned tankers transported about 10.3 million barrels of crude oil per day last year, with one-third destined for China. Additionally, 2.2 million barrels per day of heavy refined products were moved, with China receiving about 10.3%, and 45.8% of the shadow fleet's chemical and biological cargo also went to China [1].
Energy exports remain crucial for the economies of Iran, Russia, and Venezuela. In 2024, Russia's energy exports generated approximately $120 billion, accounting for about 30% of its total revenue. Iran's oil revenue is projected to exceed $50 billion in 2025, representing about 35% of its budget, while crude oil sales are Venezuela's main source of hard currency [1].
CONCLUSION
The Congressional report underscores China's strategic maneuvering to secure energy supplies by purchasing sanctioned oil at discounted rates, bolstering its reserves and supporting the economies of Iran, Russia, and Venezuela. This activity has significant implications for global energy markets and geopolitical dynamics, highlighting vulnerabilities in Western sanctions enforcement and China's focus on energy security.