Iranian President Masoud Pezeshkian has revealed that a significant portion of his country’s oil revenue remains trapped in China, highlighting the financial complications created by years of U.S. sanctions and the increasingly sensitive relationship between Tehran and Beijing.
Speaking in an interview this week, Pezeshkian said Iran’s money in China is effectively blocked from being transferred outside the country. “One of the problems we are facing is our money is blocked in China,” he said, explaining that Iran can use the funds to purchase goods within China but cannot freely transfer the money elsewhere. He attributed the restrictions to the fear of U.S. sanctions among international banks.
The disclosure provides an important insight into how Iran’s oil trade with China has operated under sanctions. Rather than receiving unrestricted cash through the conventional international banking system, Iranian oil revenues have frequently been handled through restricted accounts, intermediaries and alternative settlement mechanisms.
China has become Iran’s overwhelmingly dominant oil customer. A U.S.-China Economic and Security Review Commission report said China purchased more than 90% of Iran’s crude oil exports in 2024, with Iranian oil exports valued at approximately $46.7 billion that year.
That relationship has allowed Tehran to maintain an important source of foreign revenue despite extensive U.S. sanctions. However, the money generated by those sales has not necessarily been equivalent to unrestricted funds that Iran can move anywhere in the world.
Recent reporting by Reuters has also described an increasingly sophisticated Iran-China trading arrangement in which Iranian oil is exchanged, directly or indirectly, for Chinese goods and other supplies. Reuters reported that the mechanism uses special-purpose structures and alternative payment arrangements to circumvent conventional banking restrictions.
Against this background, Pezeshkian’s comments about Iranian funds being trapped in China have taken on additional significance.
The issue has become even more prominent following President Donald Trump’s September 24 meeting with Chinese President Xi Jinping at the White House.
According to the Chinese Foreign Ministry, Trump and Xi agreed that Iran should honor its commitment not to develop nuclear weapons and that no country or institution should be permitted to impose tolls on international waterways. The White House independently confirmed the same broad understanding in its September 25 fact sheet on the summit.
The Strait of Hormuz is particularly important because it is one of the world's major energy shipping routes. Any prolonged disruption there has implications not only for Iran but also for international oil markets and countries that depend heavily on Gulf energy supplies.
Washington has also placed China's relationship with Iran under renewed scrutiny.
U.S. Ambassador to China David Perdue said Trump made it clear to Xi that Chinese assistance to Iran was “totally unacceptable,” including direct or indirect assistance involving intelligence, parts or military equipment. Perdue subsequently said Beijing had given Washington assurances that it was not providing such assistance.
The situation therefore presents an unusual contradiction in Iran-China relations: China remains Iran's largest oil customer and an important economic partner, yet Iranian oil revenue held within the Chinese financial system cannot necessarily be moved freely beyond China's borders because of sanctions-related banking risks.
Claims that Iran currently has between $20 billion and $50 billion frozen specifically in China, however, should be treated cautiously. The figure is difficult to independently verify from authoritative public sources. Tehran has also made broader claims that more than $100 billion of Iranian assets are frozen or inaccessible worldwide, but those figures should be regarded as Iranian government estimates rather than independently established totals.
What is clear is that sanctions have dramatically changed the way Iran receives and uses its oil income. Tehran may continue selling substantial quantities of crude, particularly to China, while still facing major restrictions on how those earnings can be transferred and spent internationally.
Pezeshkian's disclosure therefore underscores a central reality of Iran's sanctions-era economy: selling oil does not necessarily mean having unrestricted access to the money generated from those sales.
And as Washington increases pressure on Beijing over its relationship with Tehran, Iran's dependence on China could become an even more consequential part of the wider economic and geopolitical confrontation involving the United States, China and Iran.
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