Iran Uses Secret Barter System With China to Evade U.S. Oil Sanctions
Iran uses a clandestine barter system to bypass sanctions, trading oil for billions in Chinese goods and military equipment while maintaining plausible deniability.
Iran is utilizing a barter-like settlement system to bypass oil sanctions and acquire billions of dollars worth of goods from China, including advanced military equipment, according to a Reuters report citing senior Iranian officials and other sources.
The Secret Financial Mechanism
The clandestine trading mechanism converts Iranian oil into credit for Chinese imports, offering a financial lifeline to Tehran amid mounting economic and pressure from the United States over its nuclear program. The arrangement allows China, the world's largest crude importer, to maintain access to discounted Iranian oil while shielding Chinese banks and exporters from international scrutiny.
"They are not interested in having their banks or companies excluded from the international financial system. They simply want plausible deniability," said Andrea Ghiselli, an international politics lecturer at the University of Exeter.
Bypassing Sanctions and Infrastructure Deals
According to the report, the financial setup was used to finance air defense equipment contracts, pharmaceuticals, vehicles, and communication gear. Between $2 billion and $2 billion passed through a special legal entity set up to evade sanctions over the past year. Around 70% of Iranian oil revenues handled through this arrangement are allocated to infrastructure projects, aligning with the 25-year strategic partnership agreement signed between the two nations.
China, which imported an average of 1.4 million barrels per day and over 80% of Iran's oil exports, continues to deflect accusations. The Chinese Foreign Ministry stated it was unaware of the situation and opposes unilateral sanctions.
