Iran's shadow fleet makes $6 billion: the regime's trick to bring oil back to China

Iranian shadow fleet earns $6 billion as it covertly exports crude oil to China, circumventing U.S. sanctions Between June and July, Iranian vessels have been quietly exporting up to six billion dollars worth of crude oil through a clandestine method designed to evade U.S. sanctions. According to estimates from United Against Nuclear Iran and analysts cited by the Wall Street Journal, this operation has allowed Tehran to bypass restrictions imposed by Washington during a brief period of eased sanctions. The so-called "shadow fleet" operates using tactics to obscure the origin of its cargo, ensuring compliance with international trade rules while avoiding scrutiny. The temporary agreement between the United States and Iran, signed on June 17, limited U.S. restrictions on Iranian oil shipments for nearly a month. In response, Iran accelerated its export efforts, sending out several tankers including the Diona, Hero II, Sonia 1, and Stream. These ships departed from the eastern port of Chabahar, carrying accumulated reserves intended for sale to Chinese buyers. Approximately twenty tankers, each loaded with around three and a half million barrels of oil, reached waters off the east coast of Malaysia. Following the U.S. lifting of naval restrictions approximately ten days earlier, Iranian vessels continued their established methods to avoid detection. They navigated toward the Eastern Outer Port Limits, an area beyond Malaysian territorial waters serving as a critical transfer point between Iran and China. This location, near the eastern entrance of the Strait of Malacca, one of the busiest maritime routes globally, lies about seventy kilometers from the Malaysian coastline within the country’s exclusive economic zone. Here, crude oil was transferred via flexible hoses onto other tankers, effectively masking its origin. These second-hand tankers then transported the oil to independent refineries known as "teapots," named for their distinctive shape. These facilities typically purchase sanctioned Iranian crude at discounted prices. As a result, U.S. authorities face challenges in tracking and enforcing sanctions against Iranian oil exports. Analysts suggest that the Iranian economy is in its worst state since the revolution, making every dollar of revenue crucial. Jonathan Panikoff, an expert on the Middle East at the Atlantic Council, noted that the regime likely prioritizes income generation for strategic purposes, primarily the ongoing struggle against the United States. Since Washington reimposed sanctions, limiting Iran's ability to export oil, experts believe Tehran will still receive billions in proceeds over the coming months. This mechanism, long in place, explains how Iran has managed to withstand U.S. pressure. China, meanwhile, continues to signal its stance to the United States, indicating it does not intend to support economic measures aimed at crippling Iran. The real contest, beyond these covert operations, lies between Washington and Beijing.