TAKEAWAYS
For years, the US controlled the global oil market through its military capability and the US-dollar payment infrastructure. The so-called “petrodollar” and “oil-for-security” system conferred immense power for controlling access to oil, and this enabled the US to dictate global affairs.
China’s moves in the global oil market – years in the making, and still in progress – are exposing gaps in the petrodollar, and this has been tactically achieved by securing diversified sources of oil supply, and, if necessary, paying for it outside the US-dollar system.
For China, diplomacy lays the foundations for securing oil supply, and this is predicated on development, not political ideology and military hardware.
US control of Venezuelan oil has been in the news lately, but the Middle East is the pivotal theatre in the US-China oil battle. China customs data for 2025 have not been published but market estimates put this region’s contribution to China oil imports at over 50%.
Since China’s diplomacy is not determined by ideology, it’s able to straddle the Sunni-Shia faultline that has divided the Islamic world.
According to market estimates, China’s top three suppliers from the Middle East for 2025 were Saudi Arabia at 14%, Iran at around 13% to 14%, and Iraq at 11% of total oil imports.
All three nations share deep historical roots and heritage but today, their geopolitical positions are in stark contrast. Saudi Arabia, a prosperous Sunni state, is a key US ally and the co-architect of the petrodollar. Iran, a Shia state, is a US adversary and its economy is in shambles following years of US-led sanctions. Iraq, which has a Shia-majority population, was invaded by US-led forces. It is still emerging from years of strife and conflicts.
China doesn’t pigeon-hole nations as “ally” or “adversary”. It categorises Saudi Arabia and Iran as comprehensive strategic partners and Iraq as a strategic partner. China and Saudi Arabia have agreed to promote the use of the yuan and riyal for trade and investment. Oil purchases are still primarily in US dollars, but Saudi Arabia’s statement, even if only rhetorical, is a thinly veiled swipe at the US-controlled global payment infrastructure.
US sanctions have not choked Iranian oil to China. Trades are executed in yuan or by barter, and shipped via Malaysia.
Other notable Middle Eastern oil suppliers include Oman, United Arab Emirates (UAE) and Kuwait, and their total estimated share of China oil imports was about 15% for 2025. All three nations are key US allies, but this has not prevented them from partnering with China.
Under China’s Belt and Road Initiative (BRI), the cumulative value of construction and investment in the Middle East is more than $123 billion – not to build military bases, but for development.
For US allies in the Middle East, China provides a hedge to mitigate risk of overdependence on the US. And, for its adversaries there, China offers an economic lifeline and a voice for legitimate concerns in the United Nations.
Outside of the Middle East, Russia is China’s single largest oil importer, accounting for an estimated 19% to 20% of 2025 imports. Unlike the Middle East, Russia carries more geopolitical and military clout and so, despite US sanctions, Russian oil continues to flow to China, which is traded in rubles and yuan.
Brazil is China’s largest Latin American supplier with an estimated 4% to 5% share of 2025 oil imports. Brazil may well sit in the US backyard, but it’s the largest Latin American nation and the world’s 10th biggest economy, giving it the leverage to push back against US strong-arm tactics.
China displaced the US as Brazil’s largest trading partner in 2009, and it designated Brazil as a comprehensive strategic partner in 2012. Crucially, bilateral trade is already being settled in yuan and real. Brazil is no pushover and it will keep its oil pipelines open to China – with or without US blessings.
The Middle East, Russia and Brazil are top suppliers to China, contributing an estimated 76% to 79% of its oil imports in 2025. Barring any drastic change in geopolitics, this consortium is the bedrock of China’s resilience in oil security.
Overall, China imports oil from around 100 nations, and its resilience in oil security is underpinned by multilateral bodies catering to nations outside of the US-led Group of Seven, namely, BRI, Shanghai Cooperation Organization (SCO) and BRICS.
BRI is an important thrust powering China’s “oil-for-development” diplomacy. Almost all of China’s oil importers are also BRI members, and for many of these nations, the benefit of long-term development offered by BRI is a more compelling alternative to “oil-for-security”.
SCO’s net-exporter members produce an estimated 20% to 25% of global oil, and its Interbank Consortium expedites de-dollarisation by enabling local currency settlement and financing of development projects. All but three of China’s top oil suppliers are either members or dialogue partners of SCO.
BRICS members include five of China’s top oil importers, namely, Russia, Iran, Brazil and the UAE, and, pending ratification, Saudi Arabia. BRICS’s net-exporter members produce an estimated 40% of global oil, and its de-dollarisation efforts are undertaken through its New Development Bank.
In essence, China’s manoeuvres draw on an ancient Chinese adage – “uniting wills to build a fortress”. By aligning the “wills” of the Global South, China is building a “fortress” to break the US grip on the global oil market, and build resilience in oil security.
Lub Bun Chong, CA (Singapore), is Director, C Consultancy. An edited version of this article was first published by Caixin Global on 19 February 2026.
