China remains key financial lifeline for Iran’s revolutionary guards

Demand for Iranian oil is allowing the country’s main branch of armed forces to withstand years of Western sanctions

China continues to flout international sanctions by purchasing large quantities of Iran’s oil,  providing a crucial lifeline to the Islamic Revolutionary Guard Corps, the brutal paramilitary group directing the current crackdown on Iranian protestors, a Western intelligence agency told Euractiv.

Largely thanks to China, oil sales remain the main source of revenue for the IRGC, the main branch of Iran’s armed forces, an official at the agency said.

“The primary buyer is China, accounting for roughly 90 percent of Iran’s oil exports,” the official said, adding that the second-largest economy in the world shows little concern about the risk of secondary sanctions, driven by its strong demand for cheap crude.

Beijing is also largely indifferent to Tehran’s violent crackdown on protesters: “They simply don’t care about Iran’s domestic policies,” the official said.

To ship its oil, Iran relies on a shadow fleet similar to Russia’s, using disguised tankers that turn off their tracking signals.

While Moscow previously provided assistance for this kind of sanctions evasion, Russia and Iran have since become competitors, the official said, as both seek to sell Western–sanctioned oil to China.

China also does not pay exclusively in cash: “There are direct deliveries of weapons systems from China to the IRGC,” the official said. Over the past six months, Beijing has also been the IRGC’s main backer in rebuilding Iran’s ballistic missile program.

Part of the regime’s procurement operations is also routed through Dubai in the United Arab Emirates, where a comparatively favourable business environment makes transactions easier, the official said.

Despite the wider Iranian economy being “in free fall”, the regime still has sufficient financial resources to fund its proxy forces across the region, with Lebanon’s powerful Shia Islamist group Hezbollah as the main beneficiary.

“We estimate that Hezbollah received between $800 million and $1 billion from Iran last year,” the official said.

Asked about reports suggesting Tehran has relied on proxy militias to suppress protests inside Iran, the official struck a more cautious tone.

While intelligence services have observed a limited influx of Shia fighters from Iraqi groups linked to the loose coalition of Popular Mobilisation Forces, known as Hashd al-Shaabi, there is no indication this occurred on a larger scale, the official said.

The IRGC, the official said, has enough personnel of its own to crack down on unrest for the moment. “The regime needs the Iraqi Shia militias primarily in Iraq.”

There, the network of Iranian-aligned militias – mostly Kataib Hezbollah, as well as smaller factions such as Harakat al-Nujaba and Asaib Ahl al-Haq – remains a key lever through which Tehran exerts influence over its neighbour.

Beyond oil, the IRGC has increasingly turned to two additional channels to diversify its finances, the assessment said: cryptocurrency transactions and large-scale gold purchases.

Turkey has played a significant role in the gold trade, as well as in currency smuggling, according to the official, despite the practice of transporting suitcases filled with cash via Turkish Airlines through Lebanon to Hezbollah – or directly to Tehran – has declined.

Yet, such direct cash transfers from Ankara are still taking place, especially since Iran has trouble directly transferring funds on the land route after the fall of their ally, Assad, in Syria in 2024.