Iran has shipped nearly 3 million barrels of oil from a storage site in China in a bid to raise funds that could be used to shore up Iran’s allied militia groups in the Middle East, people familiar with the matter told The Wall Street Journal last week.
The oil was taken from a stockpile of at least 25 million barrels that Iran had sent to China in late 2018.
China approved Iran's oil exports after talks with Iranian officials in late November and December 2024, sources told the newspaper.
The additional oil revenue comes at a crucial time for Iran, as it tries to support its allied militias in the region, such as Hezbollah, which have been battered in conflicts with Israel.
The fall of the Assad regime came as another blow, choking off the land route that Iran used to supply Hezbollah with cash and weapons, WSJ said.
The newspaper warned that the IRGC has taken charge of unloading and claiming this oil. There are concerns that the proceeds from its sale may be transferred to Iran’s regional proxy force, it noted.
US officials specifically raised concerns about the money flowing to the IRGC in its contacts with Beijing, one of the people told the newspaper.
A representative of the Chinese Foreign Ministry said that the ministry is not aware of this situation, but Beijing cooperates with all countries, including Iran, within the bounds of international law.
China has opposed the US “abuse of illegal and unreasonable unilateral sanctions” against Iran, the spokesperson said.
China's decision to allow Iran to ship the oil could stoke tensions with Washington, as President-elect Donald Trump prepares to take office. In his first term, Trump moved aggressively to curtail Iranian oil sales.
Trump’s transition team has said he would return to his maximum pressure campaign once he takes office on Jan. 20. China, as the largest buyer of Iranian oil, could be critical to that effort.
Trump might have to decide what he wants to give priority to in his relationship with Beijing, given his demands on trade and other issues.
The oil that Iran stored in China in 2018 has been at two ports—in Dalian, east of Beijing, and Zhoushan, south of Shanghai, the people said. Two vessels—the Madestar and CH Billion—recently set sail for Dalian, people told WSJ.
Madestar left the Dalian port in early January loaded with 2 million barrels of oil, and the CH Billion is believed to be still docked there, set to be loaded with 700,000 barrels, they said.
The US Treasury Department sanctioned 35 entities and vessels on Dec. 3 that it said played a role in transporting illicit Iranian petroleum to foreign markets.
Then on December 19, the Treasury imposed additional sanctions on entities and vessels, including a China-based company, to stem the flow of revenue that the Iranian regime uses to support terrorism abroad, as well as to oppress its own people.
In 2024, Iran exported 587 million barrels of oil. China imports accounted for 91% of Iran's total exports, the WSJ said. But much of the funds from those sales have remained abroad because of the impact of US financial sanctions on Tehran.
Even if Iran is ultimately able to sell all the oil now stored in China, it is unclear exactly how much money it would make.
Sanctions and the refusal of some ships to transport the oil will increase the cost of the sale and slow it down.
