Chinese state companies began supplying gasoline to Iran earlier in September and now provide up to one-third of its imports, the Financial Times reported Wednesday.
The Sino-Iranian deal may undermine US-led efforts to shut off the supply of fuel on which Iran's economy depends. Iran has large reserves of crude oil but its refining capacity is minimal.
The sales come in spite of moves over the past year by international companies, including BP and Reliance of India, to stop selling gasoline to Teheran, and highlight the difficulties of implementing sanctions aimed at curbing Iran's nuclear ambitions.
The paper reports that the Chinese gasoline fills in the gap left by the withdrawal of such long-standing suppliers.
Foreign ministers from several countries are meeting in New York on Wednesday to discuss how to convince Iran to curtail its nuclear program, which Teheran insists is not meant to produce nuclear weapons.
The White House said Tuesday that US President Barack Obama met with Chinese president Hu Jintao and had been "forceful" in calling for more cooperation from China over the Iranian issue.
Oil traders told the Times that Chinese state-owned oil companies were selling the petrol through intermediaries. The sales are legal as fuel imports are not at present included in sanctions against the country.
A Chinese official in Washington is quoted by the Times as saying "Chinese enterprises conduct normal trade relations with Iran, strictly speaking within the relevant UN resolutions. On the UN side, the Chinese government position on the Iranian nuclear issue has been very consistent and clear: China has been working with the relevant parties together for the peaceful resolution of the issue through diplomatic means."