US Accuses China of Funding Iran Amid Hormuz Tensions

US-China tensions rise as Washington links Beijing’s Iran oil imports to terrorism financing, urges support to reopen Strait of Hormuz ahead of Trump visit

Sharp remarks from US

In a pointed escalation of rhetoric, US Treasury Secretary Scott Bessent has accused China of effectively financing Iran by continuing to import large volumes of its oil, describing Tehran as the “largest state sponsor of terrorism”. The comments come at a sensitive moment, just days before US President Donald Trump is scheduled to visit Beijing for high-level talks with Chinese President Xi Jinping.

According to officials familiar with the matter, the remarks were made during a media interaction on Monday and reflect growing unease within Washington over Beijing’s energy ties with Tehran.

Oil trade under scrutiny

Bessent alleged that China has been purchasing nearly 90 per cent of Iran’s energy exports, a claim that underscores longstanding US concerns over sanctions enforcement. “Iran is the largest state sponsor of terrorism, and China has been buying most of their energy,” he said, suggesting that such transactions were helping sustain the Iranian regime despite Western pressure.

The US has, since 2018, attempted to restrict Iran’s oil revenues under its “maximum pressure” campaign, following its exit from the nuclear agreement known as the Joint Comprehensive Plan of Action (JCPOA).

Hormuz crisis deepens

The criticism comes amid rising tensions in the Strait of Hormuz, a critical maritime corridor through which a significant portion of the world’s oil supply passes. Recent disruptions, which Washington attributes to Iranian actions, have affected shipping movement in the region.

Bessent said the US was working to reopen the waterway through an initiative dubbed “Project Freedom”, aimed at ensuring safe passage for vessels currently stranded or rerouted due to the situation.

Call for China’s support

Despite the sharp tone, the US has urged Beijing to play a constructive role. Bessent called on China to back international efforts to secure the Strait of Hormuz and to use its diplomatic leverage with Iran.

“I would urge the Chinese to join us in supporting this international operation,” he said, adding that Beijing’s influence could prove critical in persuading Tehran to ease tensions and restore normalcy in the shipping lane.

Sources indicated that Washington sees China’s involvement as key, given its deep economic engagement with Iran, particularly in the energy sector.

Diplomatic pressure on Tehran

Alongside operational support, the US is also pushing for diplomatic intervention. Officials suggested that China could help de-escalate the crisis by encouraging Iran to reopen the strait and avoid further confrontation.

Bessent reiterated that the US had made it clear Iran does not have unilateral control over the strategic passage and that international cooperation would be necessary to maintain maritime security.

UN stalemate continues

Efforts to build a global consensus, however, have faced hurdles. At the United Nations, a proposed resolution condemning Iran’s alleged blockade of the Strait of Hormuz was recently vetoed by China and Russia, leading to a diplomatic impasse.

Defending Beijing’s position, Chinese envoy Fu Cong said the draft lacked balance and did not adequately reflect the broader geopolitical context, including actions by the US and its allies.

Beijing pushes back

China has also pushed back against US sanctions targeting its firms engaged in Iranian trade. Responding to recent measures, Chinese Foreign Ministry spokesperson Lin Jian criticised what he described as “illicit unilateral sanctions” and cautioned Washington against overreach.

Analysts note that China’s continued engagement with Iran reflects both strategic and economic considerations, including energy security and regional influence.

Focus on upcoming summit

The developments come ahead of the anticipated Trump–Xi meeting, which is expected to cover a wide range of issues including trade, security, and regional stability. While tensions remain high, there are indications that both sides may seek to stabilise ties through dialogue.

Bessent suggested that leader-level engagement could help ease friction, noting that mutual respect between the two countries’ leadership has previously contributed to stability.

As the situation unfolds, the US-China-Iran dynamic is likely to remain a focal point in global diplomacy, particularly with the Strait of Hormuz tensions continuing to impact energy markets and international shipping.

The development comes days after US President Donald Trump met senior executives of leading global oil companies, including Exxon Mobil, Chevron and ConocoPhillips, at the White House. The meeting focused on future investments in Venezuela’s oil sector and the framework under which US sanctions could be selectively eased.

According to officials, any approval for Indian imports would be conditional, with oversight mechanisms to ensure compliance with US regulations. While the exact terms remain unclear, the proposal could allow limited trade that was halted following the reimposition of strict sanctions on Venezuela in 2019.

India had earlier been one of Venezuela’s major crude buyers, importing nearly 6–7% of its total oil requirements from the country. Purchases stopped after the US introduced secondary sanctions, which threatened penalties on companies and nations trading with Venezuela. These restrictions made payment, shipping and insurance nearly impossible for Indian refiners.

A Reuters report said Reliance Industries, India’s largest private company, is actively seeking US approval to restart Venezuelan oil purchases. Sources indicated that Reliance officials are in talks with the US State and Treasury departments. Reliance operates the world’s largest refinery complex in Gujarat and had previously imported Venezuelan crude under a US licence, averaging about 63,000 barrels per day in early 2025.

The timing is significant as Western countries are urging India to reduce oil imports from Russia. Access to Venezuelan crude would provide Indian refiners with an alternative source, helping manage supply risks and costs amid rising domestic demand.

During the White House meeting, President Trump said the US would decide which companies could invest in Venezuela and under what terms. He also spoke of plans involving investments of nearly ₹9 lakh crore in the country’s oil sector, alongside a revenue-sharing model involving Venezuela, US interests and participating companies.

Venezuela holds the world’s largest proven oil reserves but currently accounts for only about 1% of global supply due to years of sanctions, underinvestment and production decline. India, the world’s third-largest oil consumer, depends on imports for nearly 89% of its oil needs, making supply diversification a strategic priority.

If the proposed relaxation moves forward, it could reshape energy trade dynamics, while signalling a cautious recalibration of US–Venezuela oil policy under strict political and economic controls.