Chinese Premier Wen Jiabao. Photo: wiki commons.

As countries around the world and the banks that operate within them attempt to avoid American financial sanctions aimed at deterring Iran’s nuclear program – which blocks access to doing business in the United States for any entity that buys Iranian oil- Forbes reports this morning that China will look to buy the Iranian product using gold to circumvent Washington’s policy.

China is Iran’s largest trading partner and buys more petroleum from Iran than any other country.  Already, China and India are bartering with Iran, using consumer goods, and in the case of India, the rupee, to pay for Iranian oil imports.

“Iran cannot stabilize the value of its currency with such unorthodox payment methods, and that is why its economy is collapsing,” Kenneth Katzman of the Congressional Research Service said in late March. “Iran is essentially on a junk-for-oil program.”

Iran has already said it will accept gold as payment for its oil in an attempt to prevent countries from stopping their purchases of Iranian petroleum altogether. China has already increased the amount of oil it imports from Saudi Arabia and other Persian Gulf states, according to the Forbes report.

As countries like India, Turkey, and China try to avoid American and European Union  sanctions on Iranian oil by looking to other sources, U.S. Treasury Secretary Timothy Geinther spoke over the weekend about global supplies.

“Continued cooperation to ensure adequate supply will signal to global energy markets that there will be sufficient production available to meet demand,” he told members of the International Monetary Fund.