At a Glance
Up to $2.5 billion may have moved through a special-purpose vehicle over the past year
Iranian oil was exchanged for credits used to buy Chinese goods
Purchases reportedly included medicines, vehicles and military equipment
China’s Foreign Ministry said it was “not familiar” with the arrangement
China’s Oil-for-Goods Pipeline Faces a New Test
Iran has been using a secretive trade system with China to keep goods flowing despite U.S. sanctions, Reuters reported. The arrangement links Iranian oil sales to credits for Chinese imports, helping Tehran access essential supplies while avoiding international banking channels.
Key Details
China bought more than 80% of Iran’s shipped oil in 2025, averaging about 1.4 million barrels a day, according to Kpler.
People familiar with the system said roughly $2 billion to $2.5 billion passed through a special-purpose vehicle (SPV) over the past year.
Around 70% of Iranian oil proceeds handled through the wider mechanism reportedly goes toward infrastructure projects. The remainder is used to pay Chinese companies supplying goods to Iran.
The system has reportedly operated since at least 2021, initially helping Iran obtain medicines and COVID-19 vaccines.
Sources also alleged that it was used in the past year for contracts involving millions of dollars in air-defense equipment. Reuters said it could not independently verify those transactions.
China’s Foreign Ministry said it was “not familiar with the situation” and reiterated its opposition to unilateral sanctions.
Why It Matters
The bigger question is what happens if U.S. pressure disrupts the system. No Iranian crude cargoes have successfully crossed the Strait of Hormuz to China since the blockade was reinstated on July 14, according to Reuters.
For traders, the story puts Iranian oil flows, China’s crude demand and the Strait of Hormuz back in focus. Any further disruption could add fresh volatility to energy markets.
The key signals are Iranian oil exports, China-linked sanctions, and whether the blockade continues to restrict crude shipments.
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Source: Reuters
Time: 11:30 AM EEST
