Iran and China: Secret Oil Exchange Arrangement

Details have surfaced regarding a barter-like arrangement between Iran and China, facilitating the exchange of Iranian oil for credits to acquire Chinese goods. This covert mechanism has allowed Tehran to bypass imposed sanctions, as reported by high-level Iranian officials and three individuals familiar with the situation. This setup enabled Iran to circumvent sanctions on its oil sales and purchase billions of dollars in goods, including military hardware. The mechanism offered a financial lifeline to Tehran recently, while simultaneously helping China, the world's largest crude oil importer, secure discounted Iranian oil. It also shielded banks and companies exporting to Iran from international scrutiny or penalties. Iran used this arrangement to buy medicines, vehicles, and telecommunications equipment from China, without direct engagement from manufacturers. additionally, the mechanism was employed at least once last year for contracts supplying Iran with air defense equipment worth millions of dollars. A buyer representing state-owned Chinese oil trader Zhuhai Zhenrong has been monthly depositing hundreds of millions of dollars with an obscure China-based financial entity named Zhu Xin. These deposits covered purchases agreed upon with a Hong Kong-registered company tied to the National Iranian Oil Company. Zhu Xin then dispatches these funds to Chinese exporters and infrastructure companies in Iran. Approximately 70% of Iranian oil revenues managed by Zhu Xin are allocated to infrastructure projects, with the remainder directed to special-purpose vehicle accounts for paying goods suppliers. This vehicle is overseen by two entities: one acting for the Chinese Ministry of Commerce, and another linked to the Central Bank of Iran. No records for a financial institution named Zhu Xin were found in Chinese corporate registries, nor for companies purportedly acting for the Chinese Ministry of Commerce and the Central Bank of Iran. The National Iranian Oil Company, Zhuhai Zhenrong, the Central Bank of Iran, and the Chinese Ministry of Commerce did not respond to comment requests. Conversely, the Chinese Ministry of Foreign Affairs stated it was "not aware of the described situation," reiterating its opposition to illegal unilateral sanctions.