China is buying up heavily-discounted Iranian oil, more than doubling purchases this month to reach a two-year high.

With other countries still avoiding transactions because of US sanctions, Beijing is reaping a windfall from the discounted prices. Imports are projected to rise to 856,000 barrels per day in March, up 129% from February.

The estimate includes oil on the “gray market”, hoping to avoid the US sanctions. Ship-to-ship transfers are carried out in the Middle East or in waters off Singapore, Malaysia, and Indonesia to escape tracking. Refinitiv, which provides financial market data, estimates that 3/4 of China’s purchases are “indirect” via Malaysia, Oman, or the UAE.

Traders and analysts said Iranian shipments to Shandong Province, which has a quarter of China’s refining capacity, are congesting ports. The price is estimated at $3 to $5 below the Brent benchmark, which stood at $69 on Thursday.

China’s demand for gasoline and diesel is soaring amid factory activity and development of infrastructure following the height of the Coronavirus pandemic. The revival in traffic has led to the worst smog in 12 years in Beijing.

Amid US sanctions, Iran’s oil exports dropped 80% to 95% from about 2.5 million barrels per day in April 2018, with an average assessment of about 300,000 bpd.

There was some recovery in late 2020, with estimates ranging from 447,000 to 1.2 million bpd for November.

See also Oil Minister Claims Recovery in Iran’s Exports Despite US Sanctions — But Gives No Evidence

In 2011, Iran’s revenue from crude oil sales was more than $110 billion. While Tehran no longer provides official figures, President Hassan Rouhani and his Vice Presidents gave numbers from $8 billion to “just over $20 billion” for 2019.

Majid Reza Hariri, the chairman of the Iran-China Chamber of Commerce, said last October that the 2020 total would be no more than $5 billion.

Despite the estimates, Rouhani based the Government’s 2021-2022 budget on sales of 2.3 million bpd per day.