From oil to pistachios: How barter trade is reshaping global commerce
New Delhi, Oct 6, 2025
Several Middle Eastern and Asian economies, including China, Pakistan, and Iran, are turning to barter trade to avoid the impact of secondary sanctions
The Russia-Ukraine conflict has significantly reshaped global trade, with Moscow becoming one of the most heavily sanctioned countries in the world. Increasing sanctions from the United States (US), European Union (EU), and other allies have forced Russia to revive the centuries-old barter system.
Several Middle Eastern and Asian economies, including China, Pakistan, and Iran, are turning to barter trade to avoid the impact of secondary sanctions. Once a common method to bypass currency transactions, the barter system is now making a comeback in global trade.
Let's take a look at the impact on India, which faces steep tariffs of 50 per cent, including a 25 per cent penalty on Russian crude imports, and which countries are embracing the barter system, and how it benefits them.
What is barter trade?
Barter trade is the exchange of goods or services directly for other goods or services without using money. It’s one of the oldest forms of trade, used long before currencies existed. For example, a farmer trading wheat for a pot made by a potter or a tailor making clothes in exchange for a carpenter’s furniture.
However, the barter system lost significance in modern times because of volatile valuations of goods and changing demands of different nations. While the barter system became less common, it still existed on a smaller scale. But this seems to be changing.
Russia revives barter system
According to a Reuters report, Russia carried out multiple barter deals with China. Some of the key deals include:
Cars for wheat: Chinese partners bought cars in yuan; Russian partners bought wheat with roubles, then exchanged wheat for cars
Flax seeds for goods: Russian flax seeds exchanged for Chinese goods, including household appliances and building materials
Metals for machines: Russian metals were delivered to China in exchange for machinery
Services for raw materials: Chinese services were swapped for Russian raw materials
Aluminium for services: A Russian importer used aluminium to pay a Chinese company
Currency concerns
Sanctions like disconnecting Russian banks from SWIFT in 2022 and US warnings to Chinese banks have raised fears of secondary sanctions.
According to Reuters, Chinese banks are reluctant to accept payments from Russia to avoid being sanctioned themselves. This has encouraged the rise of barter transactions, which are harder to trace. In 2024, Russia’s Economy Ministry even issued a guide on using barter to bypass sanctions and suggested creating a trading platform for barter exchanges.
Countries turning to barter
Apart from Russia, even other countries such as Iran, China and Pakistan are engaging in similar trade patterns to avoid any possible sanctions. According to a Bloomberg report, heavily sanctioned nations like Iran, Russia, and Venezuela are increasingly relying on direct goods-for-goods exchanges to sustain trade.
Recent barter trade deals (2023–2025)
1. Cars for copper and zinc (China–Iran): Chery Automobile, Tongling Nonferrous Metals Group (China), Modiran Vehicle Manufacturing (Iran) inked a deal to exchange Chinese car parts for Iranian copper, zinc, and occasionally cashew nuts to circumvent US sanctions and dollar-based payments.
2. Auto parts for pistachios (China–Iran): Beijing sent about $2 million worth of auto parts to Iran in exchange for pistachios.
3. Tea for Oil (Sri Lanka–Iran): Sri Lanka paid for Iranian oil shipments with Ceylon tea exports. The value was estimated at around $250 million in settlement of past dues.
4. Crude for fuel equipment (Venezuela–Iran): Both countries inked a deal to exchange Venezuelan crude for Iranian condensates and refinery materials. This was aimed at supporting mutual energy needs under US sanctions.
Pakistan gains dominance
Pakistan’s growing presence in the barter trade system could pose a challenge to India’s exports.
In June this year, rising tensions between Iran and Israel disrupted India’s basmati rice exports. Pakistan quickly stepped in, striking a deal with Iran to exchange rice for petroleum, copper, and electricity.
In 2023, the Pakistani government authorised barter trade with Afghanistan, Iran, and Russia, encouraging direct goods-for-goods exchanges for products, including oil and gas, to ease pressure on its rapidly depleting foreign reserves.
Earlier this month, Arab News reported that Pakistan approved amendments to the barter trade framework with Afghanistan, Iran, and Russia to facilitate smoother B2B exchanges. These barter arrangements help Pakistan conserve its dollar reserves and secure essential imports.
Can barter system help evade sanctions?
While the barter system is not a foolproof solution, it has helped countries like Russia sustain their economy under heavy sanctions. It has also benefited trading partners, allowing them to procure crude, metals, and other essential goods at discounted rates. However, Western nations are closely monitoring these exchanges and taking measures to prevent the circumvention of sanctions.
What are Western nations doing?
Western countries have been closely monitoring how Russia tries to evade sanctions. To stop this, the European Union, the US, the UK, and Japan created a Common High Priority List (CHPL), a list of goods that Russia is actively seeking for its war efforts.
Currently, the CHPL includes 50 categories of goods, identified by standardised global trade codes (HS Codes), that Russia is trying to obtain.
The UK government, in an August 4 advisory, said Russia continues to acquire Western military and dual-use goods through third countries despite sanctions. It advised companies to be cautious when trading with nations like Armenia, China, India, the UAE, and Vietnam.
[The Business Standard]
