Fetal circulation

Intrauterine fetal circulation is drastically different than that of extrauterine infant circulation.  In the fetus, blood does not need to enter the lungs to become oxygenated.  The exchange of gasses actually occurs through the placenta.  There are several adaptions in the fetal circulation to achieve adequate oxygenation of fetal organs and tissues. These adaptions include the umbilical vein, the umbilical artery, the ductus venosus, the ductus arteriosis, and the foramen ovale.  Please see the diagram below that shows each of these adaptations. 

This video from the Khan Academy gives a fabulous tutorial of how blood flows through the fetus.  Please watch this great step by step pathway of blood circulating through the fetus.