Iran evades US sanctions, exporting oil to China via ship-to-ship transfers

Key Points:

• Iran is circumventing US sanctions through ship-to-ship transfers using a "shadow fleet" of old tankers that obscure ownership and identity, with many vessels registered and crewed by Chinese entities.
• China, Iran’s primary oil consumer, facilitates this evasion by registering tanker owners in Chinese cities, supplying crews, and encouraging companies to ignore US sanctions, thereby securing discounted Iranian oil without official import records.
• Most transfers occur in the Eastern Outer Port Limits (EOPL), a maritime zone in Malaysia’s exclusive economic area where enforcement is limited, allowing sanctioned vessels to anchor, resupply, and redistribute Iranian and Russian oil.
• Despite some enforcement actions, such as Malaysia fining detained vessels, ships like the Nora and Lana Luster continue to operate and deliver oil to China, highlighting the limited impact of sanctions without a full military blockade or increased pressure on China.
• The US Treasury aims to disrupt Iran’s oil revenue to hinder funding for weapons and terrorism, but due to the lag in oil delivery and payments, Iran is expected to continue receiving significant oil revenue until at least October 2024.