Iran, China Bypass Sanctions with Secret Oil-for-Goods Trade

Iran has developed a secret trade channel with China to bypass US sanctions on its oil sales. The barter-like arrangement, which began in 2021, allows Iran to exchange oil for credits to buy goods from China, including military equipment. This mechanism has provided a financial lifeline for Tehran as the US intensified economic and military pressure over Iran's nuclear program.

The trade channel is used by Iranian companies to buy medicines, vehicles, and communication equipment from Chinese manufacturers. The arrangement also allows China to retain access to discounted Iranian oil while shielding banks and companies that export to Iran from international scrutiny or penalties.

According to sources familiar with the matter, between $2 billion and $2.5 billion flowed through a special purpose vehicle (SPV) used in the trade mechanism over the last year. The SPV is managed by entities acting on behalf of China's Ministry of Commerce and Iran's central bank.