Bargain and Barter: China's Oil Trade with Iran

Abstract

The US withdrawal from the nuclear deal and its ratcheting up of sanctions aimed to cut Iran's oil revenues virtually to zero by reducing trade between Tehran and its top foreign customers, especially China. This article examines the dynamics of the Sino-Iranian oil business and finds that the Chinese have never terminated their imports; instead, when Beijing cannot deal with Tehran directly, it continues the flow through subterranean methods. This practice holds some benefits for both sides, but the Iranian economy has become highly dependent on bartering with the East Asian power: exporting crude and receiving part of the revenues in Chinese goods and services. The two countries have vowed to keep up the oil trade, as sanctions have led Iran toward a growing economic and technological orientation toward the East.