China and Iran agree to trade cash for oil

China will pay in cash the next time it buys oil from Iran, according to a report from Breaking Energy, citing Iranian news agencies.

Previously, Tehran imported goods from China as repayment for the more than 440,000 barrels per day that China purchases. The new deal was reportedly struck last week.

Chinese Foreign Minister Wang Yi, left, and Iranian Foreign Minister Mohammad Javad Zarif hold a press conference following a meeting in Tehran, Iran.
Atta Kenare | AFP | Getty Images

"The two countries reached an agreement on payments partly in cash and the transfer of money to a third country to pay for imports," according to the report.

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However, the deal is only a preliminary agreement. A permanent deal would have to be reached by June 30. Citing sources familiar with the matter, Breaking Energy said it's likely that the deal is "laying the groundwork for increased oil sales to China."

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