China Welcomes U.S.-Iran Deal as 60-Day Window Opens

China has officially welcomed the first-phase memorandum of understanding (MoU) between the United States and Iran, as a 60-day negotiation window opens following the historic agreement that promises to reopen the Strait of Hormuz and ease months of regional conflict. Chinese Foreign Minister Wang Yi spoke with Iranian Foreign Minister Abbas Araghchi by phone on June 17, expressing Beijing’s support for the diplomatic breakthrough, according to People’s Daily.

The Agreement

The U.S. and Iran remotely signed a 14-article memorandum of understanding on June 14, with a formal signing ceremony scheduled for June 19 in Geneva, Switzerland. U.S. President Donald Trump signed the document at a dinner with French President Emmanuel Macron at the Palace of Versailles during the G7 summit, while Iranian President Masoud Pezeshkian signed the MoU at midnight Tehran time on June 18, as reported by Xinhua News.

Pakistan Prime Minister Shehbaz Sharif announced that the MoU is immediately effective. Under the terms, Iran will reopen the Strait of Hormuz to commercial shipping, and the U.S. will begin lifting its naval blockade on Iranian ports, with both steps expected to be completed within 30 days. The agreement also includes a freeze on new U.S. sanctions, the release of $24 billion in frozen Iranian assets during the negotiation period, and a permanent cessation of hostilities on all fronts, including Lebanon.

China’s Diplomatic Response

During the phone call initiated by Araghchi, Wang Yi stated that “facts have proven that force and power politics cannot solve problems; dialogue and negotiation are the correct choice.” The Iranian foreign minister briefed Wang on the MoU details and “sincerely thanked China for its positive role in promoting negotiations and reaching the agreement,” according to the People’s Daily report.

Chinese Foreign Ministry spokesman Lin Jian had earlier expressed Beijing’s position at a June 15 press conference, stating that “China welcomes the U.S. and Iran reaching agreement on the first-phase MOU content, and appreciates Pakistan’s mediation efforts,” as reported by China News Service. Lin Jian also called on both sides to sign the agreement as scheduled and expressed China’s willingness to work with the international community to restore peace in the Middle East and Gulf region.

Energy Implications for China

The reopening of the Strait of Hormuz carries profound implications for China, the world’s largest crude oil importer. The U.S.-Iran conflict, which began on February 28, severely disrupted crude flows through the strategic chokepoint, with China’s crude imports falling 20% year-on-year in April to 9.25 million barrels per day and dropping further to approximately 7.8 million barrels per day in May — a 29% decline, according to an analysis by Asia Times.

Chinese independent refiners, known as “teapots,” faced mounting pressure from both the supply disruption and U.S. sanctions. Rising fuel prices drove many consumers toward electric vehicles, eroding domestic gasoline demand. In response, China’s National Development and Reform Commission allowed some independent refiners in Shandong province to cut output from June to no lower than 80% of last year’s monthly average.

A Double-Edged Sword

While the peace deal offers short-term relief, Chinese commentators have highlighted longer-term strategic challenges. A Sichuan-based columnist writing under the pseudonym Fanyuzhi described the situation as a “double-edged sword” for China, noting that while lower oil prices will reduce logistics costs and ease inflation in the short term, “over the long term, cheap oil will slow the push for new energy, and China stands to lose the privileged position it built with Iran during the sanctions years.”

During the sanctions period, China built a privileged position by importing Iranian oil through a shadow fleet at discounted prices. With Western governments unfreezing Iranian assets and allowing Tehran to legally sell crude, European, Japanese, and South Korean companies are expected to compete for Iranian crude, eroding China’s exclusive access.

China’s refined fuel imports have been hit particularly hard, dropping 58% year-on-year in May 2026. For the first five months of 2026, total crude imports fell 4.8% from the same period last year. The disruption also accelerated a shift in China’s automotive market: new energy vehicles exceeded 60% of domestic passenger car retail sales for the first time in April 2026, with domestic brands crossing 80% market share, according to Chinese industry analysts cited by Asia Times.

China’s ‘Teapot’ Refiners Under Pressure

The independent refining sector, concentrated in Shandong province, bore the brunt of the crisis. These “teapot” refiners were initially ordered by Chinese authorities to maintain high output even at a loss, with warnings that cutting utilization rates could result in their crude import quotas being slashed. However, as domestic gasoline demand slowed due to rising fuel prices and the accelerating shift to electric vehicles, Beijing eventually relented. The NDRC allowed output cuts from June, provided they did not fall below 80% of the previous year’s monthly average.

Broader Geopolitical Context

China’s role in the Middle East has been steadily expanding. Beijing helped broker the Saudi-Iranian reconciliation and played a behind-the-scenes role in the U.S.-Iran talks, positioning itself as a constructive diplomatic player. Wang Yi emphasized China’s support for Iran’s sovereignty and its backing of Pakistan’s mediation efforts, while urging all parties to focus on maintaining stability in the Strait of Hormuz.

Analysts suggest that Washington has gained significant leverage through the Iran deal, following the capture of Venezuelan President Nicolas Maduro in January, giving the Trump administration greater bargaining power in global fossil fuel markets. Some Chinese analysts believe the U.S. may now redirect military and political attention to the Indo-Pacific, with reports emerging that the Trump administration is considering purchasing the Chagos Islands from Mauritius to secure direct control of the Diego Garcia naval base.

A Fragile Peace

Despite the optimism, multiple sources caution that the peace deal remains fragile. An Asia Times columnist compared the situation to “two exhausted boxers catching their breath,” warning that renewed Israel-Hezbollah violence could derail negotiations. The 60-day window is considered tight for resolving the complex nuclear issues, and U.S. and Iranian officials have offered sharply different descriptions of the accord’s details.

What’s Next

The formal signing ceremony in Geneva on June 19 will mark the next milestone. The 60-day negotiation period will determine whether the parties can reach a comprehensive final agreement covering Iran’s nuclear program, sanctions relief, and regional security. For China, the coming weeks will reveal whether the diplomatic breakthrough translates into stable energy supplies and whether Beijing can maintain its influence in a rapidly reshaping Middle East landscape.

As Wang Yi noted in his conversation with Araghchi, “the曙光 of peace has already appeared; the key next step is for all parties to truly implement their commitments and排除干扰 from all sides.” The world will be watching closely.