>economic damage

Shutting down on subsectors of petchem with i.e. forgoing $30-80 margin per barrel of refined crude, around 1-2mbd, which is... not nothing but fraction vs US cost to sustain war to deny those barrels - think ~50b per year isolated to discretionary SOE petchem vs 200b war supplemental. The important point is they don't have to actually sacrifice barrels for broader industry with petchem inputs. A few energy SOEs twiddling thumbs is completely different level of exposure vs others who may have to shut down production lines due to lack of oil/petchem where each barrel translates to significantly higher margins on intermediary/finished goods. Those are not discretionary.

>But not eliminated

Of course not eliminated, there will be adjustment pains/friction to unprecedented changes, but PRC stock market has always been dud performer/casino (despite gov attempts to reform) and not indicative of actual industrial performance.

>Why a waning customer

Because PRC is not going to be waning customer. PRC wants no oil dependance for itself =/= PRC stop buying oil. Reminder PRC is the worlds largest oil refiner by capacity, bigger than US. As PRC electrifies and oil demand diminishes, they are not going to let those expensive assets deprecate when they could be value producing. PRC will continue to buy massive amounts of oil to sell refined oil products to others, i.e. pocket that 50b+ per year which could be 250b per year if domestic oil is displaced and refineries only need to export.

What PRC wants post domestic oil, is to continue importing massive amounts of crude so world will import massive amount of surplus petro products from PRC... That's partly why PRC SPR is so big, that 1.4b in peacetime was used to influence global oil prices by manipulating supply... but if Iran is handing PRC petro-yuan on platter then that is even better control. GCC petro states are not going to shut off their exports that literally funds everything, they need export proceeds to survive, and if PRC via Iran has chokehold on what oil goes out, then they going to prioritize selling to PRC. This not even considering they need PRC goods/intermediate goods to survive.

>Inputs going up in price is still worse than not.

Inputs going up for EVERYONE ELSE disproportionately is better than not, because this is massive net relative advantage for PRC. CTO barrels subsidizing 2/3 of industrial (~5mbd) with 50% inputs than everyone else is insane competitive advantage. Sure, none GCC producers are winning the resource export game. High oils prices which PRC industry is insulated from = PRC is going to STOMP other industrial producers and win in manufacturing export game (even harder). If PRC plays along with Iran petro-yuan / tollbooth game, who knows they can even scale up discounted crude to refined export complex, i.e. they will also parasitically win the resource export game being reseller. PRC scraping extra margins off below benchmark price which others will have to pay (assuming they're even allowed) is MUCH stronger position than PRC original plan to have legacy refinery operate off benchmark price. This part key, arbitrating Iranian petro-yuan / gating export access = higher oil prices for everyone else = PRC coal to petchem AND crude to petchem are BOTH going to profit disproportionately. This doesn't mean PRC doesn't also pay high prices, but others simply paying highER creates market clearing conditions that will liquidate competitors who are structurally uncompetitive paying benchmark.