As tensions escalate in Iran and oil prices near $70 a barrel, attention has returned to a little-known financial channel linking Tehran and Beijing. Analysts say the arrangement bypassed the US dollar and reduced exposure to sanctions.
Sourabh Jain of Magnum Finvest Services points to Bank of Kunlun as the key player. The lender, controlled by China National Petroleum Corporation, handled payments for Chinese purchases of Iranian oil when sanctions blocked dollar transactions.
China reportedly bought about $1.5 billion in Iranian oil each month, paying in yuan. Official customs data showed no direct imports from Iran. Instead, shipments appeared to originate from Malaysia, despite volumes exceeding Malaysia’s production capacity.
Oil tankers allegedly relabeled Iranian crude before delivery to China. Payments settled in yuan accounts at Kunlun. Because sanctions restricted dollar clearing, Iran spent much of that money on Chinese goods and services.
The US Treasury sanctioned Kunlun in 2012 for dealings with Iranian banks. However, the bank operated largely outside Western financial systems.
Analysts estimate that nearly 90 percent of Iran’s oil exports went to China at discounted rates. With conflict intensifying, this contained, dollar-free trade loop has again drawn global attention.
