Even as President Donald Trump issued a warning Monday to Iran against threatening the United States, and Secretary of State Mike Pompeo tore into the Iranian leadership during a speech Sunday, it looks like the harsh rhetoric from the U.S., along with the renewal of sanctions against the oil-rich country, would not hurt Iran’s economy too much. Two of the world’s largest consumers of crude oil — China and India — are increasing their import of Iranian crude, the mainstay of the Middle Eastern country’s economy.

Between April and June, India imported 5.67 million tons of Iranian crude, or 457,000 barrels per day, a figure that moved Iran above Saudi Arabia in Indian crude imports (Iraq is India’s biggest supplier of oil) for the quarter, according to data made public Monday by India’s oil minister Dharmendra Pradhan.

After the large-scale international sanctions on Iran were lifted in January 2016, the country has been offering discounts on its oil exports, longer credit periods and cheap shipping to attract importers, a deal that Indian refineries have taken advantage of. For the ongoing fiscal year, they plan to import almost twice the amount of Iranian oil compared to the previous fiscal.

However, the looming threat of U.S. sanctions, the first tranche of which takes effect Aug. 6 — the second set will come into effect Nov. 4, targeting the country’s petroleum sector — may lead to reductions in Indian imports, or even a complete elimination. Pradhan did not comment on this, but the June imports were over 15 percent lower than in May.

China Oil Pumpjacks
Pumpjacks are seen at an oil field in Huaian, Jiangsu province, China, Nov. 11, 2017. REUTERS

China, on the other hand, in the middle of a trade war with the U.S. — started by Trump — is winding down its crude imports from the U.S. and switching to Iranian oil instead. Chinese petroleum products feature on the list of goods on which the U.S. has threatened to impose higher tariffs at a later date, and if and when that happens, China is sure to reciprocate in kind, causing some Chinese refineries to take preemptive action to safeguard their output.

Along with France, Germany, Russia and the United Kingdom, China remains committed to the deal signed between major world powers and Iran, even after Trump pulled out the U.S. from it unilaterally. Under the deal, Iran would be able to trade internationally in exchange for limiting its nuclear program.

China is both the world’s largest importer of crude oil and also Iran’s biggest export market for petroleum products. It is also the second-biggest importer of U.S. crude, but that may not last long as Chinese refineries look to the Middle East and West Africa to circumvent the ongoing trade spat between the world’s two largest economies.

These developments could be why the market has largely ignored the increasing U.S.-Iran tensions, and has focused instead on the potential oversupply in the crude oil market, sending the global benchmark Brent crude downwards over the last few days. It was at $72.79, lower by 0.37 percent, or 27 cents per barrel, as of 12:53 a.m. EDT Tuesday.

While the global oil cartel — Organization of the Petroleum Exporting Countries (OPEC) — under pressure from Trump, and Russia, have talked about increasing supply after over two years of cutting output, Iran — also an OPEC member — has resisted the calls to raise production, since it stands to benefit from higher crude prices. Shale drilling in the U.S. is also at record levels, making the country the top oil producer in the world.