Reuters reported that the Islamic Republic used a mechanism similar to barter to evade oil sanctions and buy billions of dollars’ worth of goods from China, including medicine, cars, communications equipment, and military equipment.

Two senior Iranian sources and three individuals familiar with the matter told Reuters that under this mechanism, revenue from selling Iranian oil to China is converted into credits for purchasing goods and services from that country. The sources estimated that over the past year, between $2 and $2.5 billion was transferred through an entity created with a specific purpose.

According to the sources, the mechanism has been active at least since 2021 and was initially used to provide Iran with medicines and COVID-19 vaccines. The sources said that the Islamic Republic later used it to buy cars and communications equipment and, in at least one case over the past year, for contracts to supply air defense equipment worth millions of dollars.