Iran Sidesteps US Sanctions With Barter-Style Trade With China

TEHRAN: Iran has adopted a barter-style trading system with China to continue international commerce while bypassing US sanctions and traditional banking channels, according to people familiar with the arrangements and two senior Iranian sources.

Under the mechanism, Iran is exchanging crude oil for billions of dollars’ worth of Chinese goods and services, including medicines, vehicles, communications equipment and other products, the sources said.

The arrangement allows Tehran to maintain oil exports while reducing its reliance on the conventional international banking system.

According to the sources, Iranian oil is sold under arrangements that allow Tehran to obtain credit for Chinese goods imported in exchange for the crude.

Companies producing the goods do not directly conduct conventional financial transactions with Iran, helping the trade avoid exposure to the banking channels targeted by US sanctions.

People familiar with the trade said Iran had also benefited from similar arrangements in contracts involving the supply of air-defence equipment over the past year.

The sources did not provide detailed information about the transactions, and the arrangements could not be independently verified.

The sources said Iran’s efforts to maintain trade with China are not limited to barter arrangements.

Tehran is also using other mechanisms that allow it to obtain goods and services from Chinese companies without relying on conventional international banking networks.

The strategy enables Iran to continue commercial activity despite extensive US financial restrictions.

By reducing the need for dollar-based transactions and Western financial institutions, such arrangements can provide Tehran with alternative channels for maintaining trade.

Asked about the reported barter-style arrangements, China’s Foreign Ministry said it was not aware of the specific circumstances described in the report.

However, Beijing reiterated its longstanding opposition to unilateral sanctions.

China has remained one of Iran’s major economic partners despite US sanctions and has continued to maintain significant commercial ties with Tehran.

Iran’s missions to the United Nations in New York and Geneva did not respond to requests for comment regarding the reported arrangements.

The exact scale of the barter-style trade and the value of goods exchanged for Iranian oil remain unclear.

However, the reported system highlights Tehran’s efforts to adapt its international trade networks in response to continuing US economic pressure.

For Iran, alternative trade mechanisms provide a way to preserve oil exports and access essential imports without fully relying on a financial system in which Washington has significant influence.

The development also underscores the increasingly important role of China in Iran’s efforts to withstand US sanctions and maintain access to international markets.