Alleged secret barter network between Iran and China bypasses sanctions: $2.5 billion in transactions in one year

It has been alleged that Iran is operating a secret, barter-like trade mechanism with China to bypass sanctions on its oil sales. Two senior Iranian officials and three sources monitoring the matter, speaking to Reuters, stated that instead of receiving direct cash for the oil Tehran sells to China, it receives credit used to finance goods imported from China.

According to the sources, approximately $2.5 billion in transactions have been conducted through this mechanism over the past year. It was claimed that these funds were used to finance purchases of medicine, vehicles, and communication equipment, as well as some military hardware. While details regarding military shipments were not shared, it was noted that these transactions have not been verified by independent sources.

According to the report, the system allows Iran to procure goods and services from China without directly resorting to international banking channels. China, meanwhile, maintains its access to discounted Iranian oil while attempting to keep the banks and companies exporting to Iran away from the risk of secondary sanctions.

The Chinese Ministry of Foreign Affairs, in its response to Reuters' questions, stated that it was unaware of this trade structure. Beijing reiterated its opposition to unilateral sanctions that lack United Nations Security Council approval. Iran's diplomatic missions in New York and Geneva did not respond to questions.

OIL REVENUE TURNS INTO IMPORT CREDIT

According to the information provided, the core of the mechanism involves transferring funds related to oil purchases in China to shadow financial structures and using this money for Iran's import payments. A Western official and two people monitoring the issue stated that hundreds of millions of dollars were deposited every month until this year into a China-based financial institution called ChuXin.

It was stated that these deposits were the payment for oil purchased from a Hong Kong-based company linked to the National Iranian Oil Company (NIOC). According to the sources, while approximately 70 percent of the oil revenue transferred through ChuXin is allocated to infrastructure projects in Iran, the remaining portion is directed to special-purpose company accounts established to make payments to companies providing goods to Iran.

According to data from the data analysis firm Kpler, China purchased more than 80 percent of the crude oil exported by Iran in 2025. This amount corresponds to an average of 1.4 million barrels per day. Iran and China signed a 25-year strategic partnership agreement covering energy and infrastructure in 2021; however, the implementation details of the cooperation are largely kept from the public.

The US administration has imposed sanctions on some small-scale Chinese entities for contributing to the transport of Iranian oil. However, it is assessed that Washington is avoiding broader steps that could affect the global economy. US Treasury Secretary Scott Bessent said last month that countries maintaining trade relations with Tehran could face the risk of being excluded from the dollar system.

Andrea Ghiselli, an international politics expert at the University of Exeter, stated that Beijing uses such indirect networks to show that it will not bow to US secondary sanction pressure. Emphasizing that Chinese leaders also aim to protect their own banks and companies from being pushed out of the global financial system, Ghiselli said, "They want to create a deniable ground."

News Source: 12punto