Iran has been using a secretive barter-style trading system to bypass sanctions on its oil exports and purchase Chinese goods, including military equipment and medicine, Reuters reports.

According to two senior Iranian sources and three additional sources familiar with the matter, the system moved between $2 billion and $2.5 billion over the past year through a dedicated entity.

The arrangement allowed China to continue purchasing discounted Iranian oil while protecting Chinese banks and companies from exposure to American sanctions.

The funds were managed by two entities linked to China’s Ministry of Commerce and Iran’s central bank, according to the sources.

The mechanism has reportedly been operating since at least 2021. In the past, it was used to purchase vaccines and medicine, and it was also used at least once over the past year for contracts involving the supply of air-defense equipment.

The system enabled Iranian and Chinese entities to conduct transactions without relying on conventional financial channels that could be targeted by U.S. sanctions.

China’s Foreign Ministry said it was not familiar with the specific details, but reiterated Beijing’s opposition to unilateral sanctions.

“China has consistently opposed unilateral sanctions that have no basis in international law and were not authorized by the United Nations Security Council,” the ministry said in response to Reuters’ questions about the barter system.

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

(YWN World Headquarters – NYC)