WASHINGTON, D.C.: U.S. and Chinese negotiators may be edging toward a broad trade agreement that could ease tensions between the world’s two largest economies. Still, one issue continues to divide them: Washington’s demand that Beijing halt its purchases of oil from Iran and Russia.

After two days of high-level trade negotiations in Stockholm, China’s Foreign Ministry issued a defiant statement on X, reaffirming that the country “will always ensure its energy supply in ways that serve our national interests.” It warned that “coercion and pressuring will not achieve anything” and pledged to “firmly defend” China’s sovereignty, security, and development priorities.

The statement contrasted with the otherwise upbeat tone from both sides about prospects for a trade deal. U.S. Treasury Secretary Scott Bessent acknowledged that China “takes its sovereignty very seriously” when it comes to buying Russian oil. “We don’t want to impede on their sovereignty, so they would like to pay a 100 percent tariff,” he said, describing Chinese negotiators as “tough” but stressing that the dispute had not derailed progress. “I believe that we have the makings of a deal,” he told CNBC.

For Washington, the oil dispute is tied to broader security objectives: cutting off key revenue streams that Russia uses to fund its war in Ukraine and that Iran channels to militant groups across the Middle East. President Donald Trump has threatened to impose a sweeping 100 percent tariff on Chinese goods if Beijing refuses to halt purchases from both countries. Yet analysts, including Gabriel Wildau of Teneo, doubt Trump will actually enforce such a measure, warning it could undo months of progress and jeopardize a potential high-profile meeting with President Xi Jinping later this year.

The stakes for Beijing are significant. China is by far the largest buyer of Iranian oil, accounting for an estimated 80–90 percent of Tehran’s exports—over 1 million barrels per day, according to the U.S. Energy Information Administration. It is also a major customer for Russian crude, with imports in April climbing 20 percent from the previous month to more than 1.3 million barrels per day, KSE Institute data shows. These supplies not only secure China’s energy needs but also come at heavily discounted prices, an advantage Beijing is reluctant to surrender amid global market uncertainty.

Observers say China’s position is unlikely to change. Tu Xinquan of the China Institute for WTO Studies noted that Beijing has consistently resisted U.S. pressure, even retaliating after Trump’s tariff announcements in April. Scott Kennedy of the Center for Strategic and International Studies said Beijing perceives inconsistency in U.S. policy toward Moscow and Tehran. At the same time, its own alignment with Russia remains “consistent and clear.”

Some believe China is using the standoff as a bargaining chip. Danny Russel of the Asia Society Policy Institute said Beijing sees itself as “holding the cards” and is aware that Trump wants a “headline-grabbing deal” with Xi. As such, rejecting the oil demand is unlikely to be a deal-breaker, even if it prolongs negotiations.

For now, China’s stance is unwavering: it will keep buying oil from Russia and Iran, reinforcing strategic ties and capitalizing on cut-rate prices, even at the risk of clashing with U.S. trade objectives.