A report based on five years of satellite image collection and analysis tracking the South China Sea situation off the coast of Malaysia has revealed an unsurprising fact: there is a robust circumvention of Iran sanctions and oil exports involving China.
“Forty miles east of the Malay Peninsula lies the world’s largest congregation of tankers from the ‘dark fleet.’ These aging, uninsured vessels come here daily to transfer cargo, away from prying eyes. This is how billions of dollars’ worth of sanctioned Iranian oil find their way to China each year – despite, in theory, China not importing a drop of oil from Iran for over two years,” the report states.
“An analysis from nearly five years of satellite imagery collection from this hotspot reveals the massive scale of this illicit industry as the US tightens its sanctions noose on Iran,” the report continues.
“While we cannot precisely assess the volume of oil moving through this channel, even with conservative assumptions about the size of the tanker fleet, the data suggests that around 350 million barrels have changed hands at this hotspot in the first nine months of the year.”
“At 2024 average oil prices and the discount applied to sanctioned crude, that amounts to $20 billion. The actual figure could be much higher.”
For Tehran, which needs revenue and lacks oil buyers, this “gamble” in the South China Sea is a means of “survival.” For China, unbound and unrecognizing of US-imposed restrictions, it is a way for their small refineries to access cheap oil.
To the West, this maritime hub is a direct threat to their efforts to curb revenue streams to Tehran and Moscow and illustrates why sanctions are so challenging to enforce. President-elect Donald Trump has declared his intention to increase pressure on Iran upon taking office, but these vast “dark” oil transportation networks often operate without the involvement of large entities.
The pressure campaign Trump pledged to execute against Iran – if effective – could also create difficulties for Beijing. As the world’s largest oil importer, China would face a shortage of cheap Iranian crude. It is estimated that Iranian oil accounts for about 13% of China’s imports.
Source: Oil Price
