China oil sale dependence puts Iran in 'colonial trap', official frets

Over nine out of every ten barrels of oil Iran exports are sold to China and often at steep discounts, a senior Iranian trade official said, adding that the dependence risks captivity in “colonial trap”.

The remarks were rare criticism by Iranian officialdom of the budding cooperation between a deeply isolated Islamic Republic and nuclear-armed economic powerhouse China.

Sanctions have left Tehran heavily dependent on China, the world's top oil importer, forcing it to navigate costly logistical hurdles to evade US-led restrictions.

“These sanctions have trapped us in a nineteenth century colonial trap, leaving the government no choice but to manage the economy at significantly higher costs than normal,” said Hojatollah Mirzaei, head of the Research Center at the Iran Chamber of Commerce.

Around 92 percent of Iranian oil goes to China, often at discounts at around 30 percent, according to Mirzaei, who bemoaned the fact that his country has little say over the transactions.

“China dictates how payments are made,” he said. “They might say, ‘use this money to buy electric buses at the price we set.’ Then Tehran’s municipality proudly announces, ‘We brought you electric buses.’”

He underlined the economic strains during a budget review session on Wednesday.

“More than half the value of each barrel is consumed in circumventing sanctions,” Mirzaei said, in apparent reference to the added expense of shipping and insuring the covert oil exports.

China has continued to purchase Iranian oil, despite US sanctions. The oil is transferred using "ghost fleets", vessels with switched off transponders and concealed ownership.