The oil, officials said, comes from a stockpile of at least 25 million barrels, which Iran sent to China in late 2018 over concerns that new sanctions imposed by the first Trump administration would hamper the country’s oil exports. He said he sent it.
China approved the drawdown and shipment last month after discussions with Iranian officials in late November and December, the people said. Officials said this is not the first time Iran has tried to sell off oil, but Beijing had not previously given permission.
A Chinese Foreign Ministry spokesperson said he was not aware of the situation but said Beijing was cooperating with all countries, including Iran, within the bounds of international law. The spokesperson said China opposes the United States’ “illegal and unjust abuse of unilateral sanctions.”
Iran’s mission to the United Nations in New York declined to comment. The US State Department did not respond to a request for comment.
The additional oil revenue comes at a crucial time for Iran, as it seeks to support its regional allies, including Hamas and Hezbollah, which have been battered by the conflict with Israel. The fall of Assad’s regime was a further blow, cutting off the land routes Iran used to supply Hezbollah with cash and weapons. Meanwhile, Iran faces high inflation and slowing growth.
China’s decision to allow Iranian oil shipments could increase tensions with the United States as President-elect Donald Trump prepares to take office. During his first term, President Trump moved aggressively to reduce Iranian oil sales.
Trump’s transition team says he will return to a maximum pressure campaign once he takes office on January 20th. China could become important to that effort as the largest buyer of Iranian oil. President Trump may need to decide what to prioritize in the relationship with China, given his demands on trade and other issues.
The oil that Iran stored in China in 2018 was stored in two ports: Dalian, east of Beijing, and Zhoushan, south of Shanghai, officials said. Officials said two ships, the Madestar and the CH Billion, recently set sail for Dalian.
The Madestar left Dalian Port in early January with 2 million barrels of oil on board, but the CH Billion is believed to still be anchored in the port and is expected to carry 700,000 barrels.
According to officials, the Madestar stopped transmitting location information and planned route via the AIS international signal system for three days in early January while in the waters off Dalian. During that time, the ship reportedly moved to the port. The ship then headed off the coast of South Korea to transfer the oil to another ship. CH Billion only briefly sent location data on January 6th.
Data from ship tracking service MarineTraffic confirmed the ship’s movements people had described.
If Iran sold its entire stockpile at current prices, it would be worth more than $2 billion. Iran could earn up to $1 billion, officials said. Officials say the Iranian government owes China about $1 billion in storage fees.
Officials said the involvement of Iran’s Islamic Revolutionary Guards Corps in the operation further heightened concerns about the shipment. According to some officials, the Iranian government uses the proceeds to support the Revolutionary Guards, which provide funding and arms to Iranian militias across the Middle East.
China has long been the largest buyer of Iranian crude oil, but it has stopped official purchases of Iranian crude oil since 2022 due to fear of U.S. sanctions, according to data from commodity research firm Kupler.
Iran has built a complex transportation network to export oil to China disguised as oil from other countries. Even if a Chinese buyer wanted to buy the stored crude, it would have to be shipped from China, marked as non-Iranian and returned to avoid violating sanctions.
U.S. officials had sought to block Iranian oil shipments by pressuring China and other countries not to participate and by imposing sanctions on ships they believed could help transport the oil. U.S. officials specifically expressed concern about contacts with the Chinese government about money flowing to the Revolutionary Guards, one of the people said.
On December 3, the US Treasury Department sanctioned 35 entities and vessels for their involvement in illegally transporting Iranian oil to overseas markets. Several Hong Kong- and Chinese-owned ships were affected.
And on Dec. 19, the Treasury Department sanctioned additional vessels and entities, including Chinese-owned companies, “to stop the flow of revenues that the Iranian regime uses to support terrorism abroad and oppress its own people.” said the ministry.
Iran exported 587 million barrels in 2024, according to the Coalition Against Nuclear Iran, a nonprofit organization that works to counter the threat posed by Tehran. According to the group, imports from China account for 91% of Iran’s total exports.
But Gregory Belew, senior Iran energy analyst at consulting firm Eurasia Group, said much of the money from those sales remains outside the country due to U.S. financial sanctions against Iran.
Even if Iran were eventually able to sell all of the oil currently stored in China, it is unclear exactly how much profit it would make. Iranian crude oil is already being sold at a discount to market prices due to sanctions. Analysts say tougher U.S. sanctions are forcing some ships to take the risk of transporting crude, raising the cost of selling it and slowing sales.
Joe Wallace and Clarence Leong contributed to this article.
Email Laurence Norman at laurence.norman@wsj.com, Bojan Pancevski at bojan.pancevski@wsj.com, and Costas Paris at costas.paris@wsj.com.
