China is showing the first signs of bowing to the Trump administration’s pressure campaign to stop buying Iranian oil, less than two weeks before Washington’s deadline to sharply curb Tehran’s vital energy sector after President Trump’s withdrawal from the 2015 Iran nuclear deal.

Beijing has long vowed to defy the revived U.S. sanctions, but this week a key Chinese export-finance bank and the country’s largest state oil refineries indicated that they were pulling back from their business with Tehran. China is Iran’s single biggest oil customer, and a drawback by Beijing would be a major victory for the U.S. pressure campaign.

Countries that opposed Mr. Trump’s decision on the nuclear deal vowed to defy U.S. secondary sanctions targeting their companies that continue to trade with Iran. But as in Europe, the prospect of losing access to the much-bigger U.S. economy and financial system has apparently forced Chinese officials to recalculate.

“China’s major firms are not just invested in Iran but other countries as well,” said Riley Walters, a policy analysts at The Heritage Foundation’s Asian Studies Center. “They have much more to lose if they are subject to sanctions, which is why you see the majors starting to pull out.”

Since May, when Mr. Trump withdrew the U.S. from the multilateral deal endorsed by the Obama administration that eased global sanctions in exchange for curbs on Iran’s suspect nuclear programs, his administration has worked to thwart what it says is Tehran’s aggressive behavior across the Middle East by reimposing sanctions.

Sanctions that kick in Nov. 4 directly target countries that buy Iranian oil by blocking them from access to U.S. markets and financial institutions. That has set off a scramble by some of Iran’s biggest energy buyers, including China and U.S. allies such as India and Turkey, to either get around the U.S. sanctions or make up the shortfall elsewhere.

Turkey and India asked the U.S. government for waivers to continue buying Iranian oil, and their appeals are still pending.

Last weekend, Treasury Secretary Steven T. Mnuchin ratcheted up the tension by declaring that the Trump administration would be tougher than the Obama administration on granting waivers. The Obama administration sanctioned Iranian oil before signing the 2015 nuclear deal. Mr. Mnuchin said waivers would be issued only to buyers who have significantly reduced their purchases from Iran.

Iranian officials have insisted in recent weeks that the U.S. effort to cut out its oil markets will fail. The most recent data make such claims hard to evaluate.

Iranian Oil Minister Bijan Zanganeh insisted in an interview on state television this week that the U.S. effort to stop all exports will prove futile.

“Iranian oil exports cannot be stopped,” Mr. Zanganeh said. “We will spare no effort to resist the cruel U.S. sanctions against the Islamic republic.”

Mixed results

The website Bourse and Bazaar, which tracks Iranian economic news, this week cited a report from TankerTrackers.com indicating that Iran’s oil exports in the first two weeks of October were up 10 percent from the September average.

But The Wall Street Journal reported Thursday that Iran’s overall output declined from 3.8 million barrels a day in May to 3.3 million barrels a day in early October. Major European refiners have stopped purchasing Iranian oil even as their governments frantically try to keep the 2015 nuclear deal from unraveling.

Washington and Beijing were clashing over China’s oil purchases from Iran while already engaged in a full-scale trade war over tariffs that Mr. Trump imposed in an effort to shrink China’s massive trade surpluses and halt Chinese theft of American intellectual property.

But China’s resolve may be weakening.

The state-owned Bank of Kunlun will reportedly stop processing yuan-denominated Iranian payments as of Nov. 1 — three days before the sanctions kick in. The bank is controlled by the China National Petroleum Corp. (CNPC) and handles an estimated $1.5 billion worth of Iranian-Chinese oil purchases every month.

Separately, CNPC and Sinopec, another massive state-owned refinery concern in China, revealed this week that they have not booked any orders to buy Iranian crude oil next month.

The Reuters news agency quoted Chinese officials as saying they feared running afoul of the sanctions, especially given the uncertainty over whether Washington will grant Beijing waivers.

“No company will risk taking any barrels for November,” an anonymous official told the news service. “The risk is a lot greater than the amount of oil cut.”

The Heritage Foundation’s Mr. Walters said that while it looks like the U.S. pressure is having an effect, “it is a myth that China will completely back off Iranian oil” because smaller companies will find alternatives, including on the black market.

However, he also noted that China, which has become the world’s largest importer of oil, has major geopolitical concerns to address and is wary of losing diversification in its oil portfolio, buying from Russia, Iran and other suppliers.

“Relying too much on Russian crude is something that Beijing does not want to do,” Mr. Walters said.

Derek Scissors, an American Enterprise Institute resident scholar and chief economist at the China Beige Book, said the Chinese have largely respected U.S. sanctions on Iran in the past. But he also agreed that Chinese firms could seek workarounds on Iran now that Mr. Trump has unilaterally left the agreement.

“Full cooperation requires an additional U.S. stick, such as grabbing the first sanctions violator and making an example of them,” Mr. Scissors said, “or a carrot, such as the Trump administration pardoning the Chinese entity which violated Russia sanctions in exchange for compliance going forward.”

India will also play a big role in the fate of the U.S. stated goal to drive Iran’s oil exports to zero in the coming months.

New Delhi is reportedly engaged in an urgent internal debate about buying Iranian oil with either Indian rupees or via barter agreements. Some major Indian conglomerates have already stopped importing Iranian crude out of fear that they could be blocked from U.S. markets.

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