China and Russia Stand by Iran Despite U.S. Nuclear Talks Demand

In a significant diplomatic development, China and Russia have expressed strong support for Iran's stance on its nuclear program, after the United States called for renewed negotiations. During talks in Beijing, senior diplomats from China and Russia stated that nuclear discussions should resume only on the basis of "mutual respect" and emphasized the need for the lifting of all sanctions on Iran.

The joint statement issued after the meeting underlined Iran's commitment to the peaceful nature of its nuclear program, and the two countries stressed that Iran's right to peaceful nuclear energy should be "fully respected." The diplomatic push comes after the United States renewed its calls for dialogue over Iran's nuclear ambitions, a topic that has remained highly contentious since former President Donald Trump's 2018 decision to withdraw the U.S. from the landmark 2015 nuclear deal.

In the 2015 agreement, Iran had agreed to curb its nuclear program in exchange for the easing of international sanctions. However, the U.S. exit from the deal has led to heightened tensions and a resumption of Iran's nuclear enrichment activities, with the International Atomic Energy Agency (IAEA) reporting that Iran has significantly accelerated its uranium enrichment, inching closer to weapons-grade levels.

China’s Vice Foreign Minister, Ma Zhaoxu, reiterated that all relevant parties must abandon sanctions, threats, and pressure, and work towards addressing the root cause of the issue. He emphasized that sanctions are counterproductive, and the focus should instead be on finding a peaceful resolution. Ma, alongside Russian Deputy Foreign Minister Sergei Ryabkov, also backed Iran's assertion that its nuclear activities are for peaceful purposes, under the strict supervision of the IAEA.

While Iran continues to refuse U.S. demands for nuclear talks under "threats," Tehran's defiant rhetoric masks the economic challenges posed by the ongoing sanctions. The Iranian economy has been severely impacted by these restrictions, and with rising public unrest, some Iranian officials have hinted that engaging with the U.S. for a nuclear deal might be a more pragmatic approach despite the political sensitivity.

The geopolitical situation is further complicated by the U.S.'s "maximum pressure" campaign, aimed at driving Iran’s oil exports to zero, in a bid to prevent Tehran from acquiring nuclear weapons. While tensions remain high, both China and Russia have called for a return to dialogue, urging the U.S. to show "sincerity" and re-engage in talks with Iran.

Meanwhile, the Trump administration has ramped up pressure on Iran’s oil operations by imposing fresh sanctions on Iran's oil minister, Mohsen Paknejad, and a network of shadowy tankers transporting crude to China. The U.S. Treasury's move is aimed at curbing Iran's oil revenue, which, according to Washington, is being funneled directly to Iran’s armed forces. The sanctions also target tankers—some flagged in Hong Kong, Liberia, and Seychelles—that have been using deceptive practices, such as turning off transponders and engaging in ship-to-ship transfers, to avoid detection by Western authorities.

The United States has long used sanctions as a strategy to stifle Iran’s oil exports. However, Iran has remained resilient, deploying its "shadow fleet" to keep the oil flowing despite the sanctions. This network of vessels has perfected the art of evading international scrutiny, enabling Iran to continue supplying crude to countries like China, which has openly flouted U.S. sanctions to import Iranian oil at discounted prices. Even countries like India have been indirectly involved in these shipments, further complicating efforts to enforce the sanctions.

While these new sanctions might momentarily disrupt Iran’s operations, they are unlikely to eliminate the demand for Iranian crude. As long as there is a market for the discounted oil, suppliers will find ways to bypass restrictions. This geopolitical standoff illustrates the continued tension between Washington and Tehran, especially as Iran refuses to negotiate "under pressure and intimidation."

Despite the sanctions, oil prices saw an upward spike, partially offsetting the bearish outlook from the International Energy Agency’s (IEA) latest report. The IEA’s March Oil Market Report revealed that global oil supply has outpaced demand by 600,000 barrels per day (bpd) this year, mainly due to rising U.S. production and weakening demand. This report also noted that OPEC had increased its production, undermining efforts to support global prices despite ongoing production cuts.

However, news of the fresh sanctions on Iran injected a dose of optimism into the market, as traders speculated that these measures might disrupt Iranian oil exports and further tighten global supply. At the time of writing, Brent crude was trading at $70.33 per barrel, and West Texas Intermediate (WTI) was at $67.02 per barrel, showing a slight increase from earlier in the week.

IEA Report and OPEC’s Role

The IEA also revised its demand growth forecast for 2025 down by 70,000 bpd, now forecasting an increase of 1.03 million bpd. This downward revision has added pressure on oil prices, as supply continues to exceed demand. Despite these factors, the impact of the U.S. sanctions on Russia and Iran has yet to cause significant disruptions to oil loadings, although some buyers have scaled back their purchases.

The U.S. Treasury’s sanctions were announced by Treasury Secretary Scott Bessent, who stated, "The Iranian regime continues to use the proceeds from the nation’s vast oil resources to advance its narrow, alarming self-interests at the expense of the Iranian people." Bessent emphasized that the Treasury will continue its efforts to disrupt Iran’s funding of destabilizing activities.