Commentary: How China Breaks the U.S. Grip and Builds Resilience in Oil Security

1. For decades, the United States maintained its dominance over the global oil market primarily through its military strength and the U.S. dollar’s centrality in global oil transactions—a system commonly dubbed the petrodollar and “oil-for-security” arrangement. This setup not only dictated access to oil but also granted the U.S. significant sway over international affairs. [para. 1]

2. In recent years, China has actively sought to exploit vulnerabilities in the U.S.-led petrodollar system. By diversifying its oil supply sources and occasionally conducting transactions outside the U.S. dollar system, China has strategically increased its independence in oil procurement. [para. 2]

3. China emphasizes diplomacy rooted in economic development, rather than political ideology or military power, as the foundation for securing its oil supplies. [para. 3]

4. While U.S. interest in Venezuelan oil remains notable, the Middle East is a crucial area of competition between the U.S. and China for oil dominance. As of 2025, market estimates indicate that over 50% of China’s oil imports originate from the Middle East. [para. 4]

5. China’s pragmatic diplomacy, unconstrained by ideological considerations, enables it to engage with both Sunni and Shia powers in the Islamic world, overcoming deep-seated regional divisions. [para. 5]

6. The top three Middle Eastern suppliers to China in 2025 are estimated to be Saudi Arabia (14%), Iran (13-14%), and Iraq (11%), each with distinct geopolitical alignments and challenges. [para. 6][para. 7]

7. Saudi Arabia is a wealthy Sunni nation closely allied with the U.S.; Iran is a Shia rival of the U.S. crippled by sanctions; and Iraq, also Shia-majority, continues to recover from conflict following a U.S.-led invasion. [para. 8][para. 9][para. 10]

8. China avoids binary categorization, instead labeling Saudi Arabia and Iran as comprehensive strategic partners and Iraq as a strategic partner, reflecting its broad but nuanced engagement in the region. [para. 11]

9. China and Saudi Arabia have agreed to promote the use of their local currencies—the yuan and riyal—for trade and investment. Although most oil sales still occur in U.S. dollars, Saudi Arabia’s openness to alternatives signals a subtle challenge to U.S. financial dominance. [para. 12]

10. Despite U.S. sanctions, Iran continues to export oil to China, often settled in yuan or through barter and shipped via Malaysia. Other key Middle Eastern suppliers—Oman, UAE, and Kuwait—collectively contribute about 15% of China’s 2025 oil imports, underscoring that U.S. alliances do not preclude pursuit of Chinese markets. [para. 13][para. 14]

11. Under China’s Belt and Road Initiative (BRI), over $123 billion in construction and investment in the Middle East has focused on development rather than military expansion, offering an attractive partnership model. [para. 15]

12. For U.S. allies, collaboration with China offers a hedge against excessive reliance on the U.S., while adversaries benefit from economic ties and support within international forums like the United Nations. [para. 16]

13. Russia is China’s largest single oil supplier, accounting for an estimated 19-20% of 2025 imports. Despite U.S. sanctions and greater geopolitical clout, Russia’s oil trade with China is robust and frequently settled in rubles or yuan. [para. 17]

14. Brazil, representing 4-5% of China’s oil imports in 2025, is South America’s largest nation and resists U.S. pressure. Since 2009, China has been Brazil’s largest trading partner, with transactions increasingly conducted in local currencies. [para. 18][para. 19]

15. The Middle East, Russia, and Brazil together supply 76-79% of China’s oil imports in 2025, forming the core of China’s robust oil security strategy. [para. 20]

16. China sources oil from around 100 nations, building energy security through multilateral organizations such as the BRI, Shanghai Cooperation Organization (SCO), and BRICS, which promote cooperation outside the U.S.-led global order. [para. 21]

17. Nearly all of China’s top oil suppliers participate in the BRI, which emphasizes development-driven partnerships over security arrangements; the SCO and BRICS further facilitate de-dollarization and financial collaboration among oil exporters. [para. 22][para. 23][para. 24]

18. In sum, China’s approach leverages shared interests among Global South nations to challenge U.S. dominance in the global oil market and reinforce its own energy security, drawing on a philosophy of collective resilience. [para. 25]