James Kynge

First of all, this is a big blow from an oil import perspective.

If we add up

Venezuela's contribution to Chinese oil imports and Iran's contribution to the same oil imports, we get close to about 20%.

That's one fifth of China's imported oil needs, which could be disrupted, both in the case of Venezuela, which accounts for about 4% of China's oil imports, and in the case of Iran, which accounts for close to 15%.

So if there is

A deeper chaos in Iran or perhaps even regime change, that could be a major blow for China in terms of its reliance on imported oil.

But let me just go a little bit further and stick with Iran for just one second.

China is Iran's biggest trade partner.

And it's also a significant strategic backer of Iran, which has basically been isolated by the West for many years now.

China buys about 90% of Iran's oil at a significant discount because...

Iran's oil is sanctioned by most Western powers and therefore they can't buy it.

So Iran needs to sell that oil to somebody.

This means effectively that China gives the Iranian regime an economic lifeline.

Aside from that,

China has said that it's providing about 25 billion US dollars in loans to Iran to build all kinds of infrastructure projects there.

And an even bigger project was inked in 2021.

That is when Iran and China signed a 25-year agreement for 400 billion.

Let me say that figure again, 400 billion US dollars.

in Chinese investment in energy, transport, banking, telecoms, and of course the oil sector as well.

So what we have now is a situation in which one of China's biggest non-Western partners is being plunged deeply into chaos