Iran-China Oil Barter System Keeps Billions Flowing Despite US Sanctions
Iran and China have maintained a lucrative oil trade despite US sanctions on Tehran's crude exports. According to Kpler data, China accounted for over 80% of Iran's shipped oil exports in 2025, averaging about 1.4 million barrels per day.
The two nations have developed an oil barter system that allows Iranian oil proceeds to be converted into credits used to pay Chinese suppliers. This arrangement bypasses conventional international banking channels and has enabled billions of dollars' worth of trade to continue flowing between the countries.
The mechanism involves a special-purpose vehicle (SPV) handling payments, with funds moving through Chinese financial entities such as ChuXin. About 70% of the proceeds handled by ChuXin are allocated to infrastructure projects, while the remainder goes into the SPV used to pay companies supplying goods to Iran.
The system has been in place since at least 2021 and was initially used for medicines and Covid-19 vaccines. Estimated $2 billion to $2.5 billion flowed through the SPV over the past year, according to sources. However, the arrangement may face greater pressure from the US blockade of Iran, which Reuters reported last week had resulted in no Iranian crude cargoes successfully transiting the Strait of Hormuz to China since July 14.