Oil Dispute: Potential Price Increase Due to Trump's Possible Sanctions

China could soon face a shortage of cheap Iranian crude oil, which accounts for about 13% of its imports. In the event of Donald Trump's re-election as U.S. President and a tightening of sanctions against Iran, the costs for China’s imports could rise, putting further pressure on the country’s struggling refinery industry. Independent refineries, known as 'Teapots,' would be particularly affected by this. Trump's "maximum pressure strategy" is expected to return, according to some Iranian, Arab, and Western officials. This could potentially lead to a decrease in Iranian oil exports and drive up global oil prices. During his first term, Trump re-imposed sanctions against Iran in 2018, which halted the flow of oil to countries like India, Japan, and South Korea. In 2019, Chinese Teapot refineries emerged as buyers of discounted Iranian crude oil, filling the gap left by Chinese state oil companies wary of U.S. sanctions. China and Iran developed a trade system largely based on the Chinese Yuan, bypassing U.S. dollar financial oversight and complicating sanctions. Meanwhile, Washington hesitated to take measures that could further reduce market supply following the Ukraine war. According to Vortexa Analytics, China imported about 1.4 million barrels of Iranian oil per day in the first nine months of this year. Nonetheless, the U.S. is expanding its sanctions by targeting so-called 'dark fleet' ships that transport Iranian oil. This has slowed the flow from Malaysia to China and could also affect ship-to-ship activities, as confirmed by an anonymous Teapot oil trader. If Trump tightens sanctions against Iran and Venezuela, already loss-making Teapots might be forced to further cut their production, independent refineries fear.