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According to Reuters, China’s crude oil imports from Indonesia have surged dramatically this year. This has raised suspicions that Iranian oil, currently under U.S. sanctions, is being relabeled to bypass scrutiny. Traders and market analysts suggest this shift reflects new dynamics in crude oil trade, as traditional transshipment routes through Malaysia face tighter controls.
Chinese customs data reveals that in the first ten months of this year, the country imported 9.81 million tons of crude oil from Indonesia, averaging approximately 235,570 barrels per day. This marks a sharp increase from the less than 100,000 tons recorded in 2024. However, Indonesian customs data indicates that the country exported only 1.7 million tons of crude oil from January to September, with just 25,000 tons destined for China.
Experts attribute the significant discrepancy between the two datasets to Iranian crude oil being rerouted through maritime routes off Malaysia, where its origin documents are altered. One trader noted, “Some banks are rejecting certificates of origin from Malaysia,” making Indonesia a more convenient alternative on paper.
Iranian oil has long been declared as Malaysian before reaching China, the largest consumer of Iranian crude despite U.S. sanctions. Although China officially reported no Iranian oil imports since 2022, its customs data frequently shows oil volumes from Malaysia far exceeding the Southeast Asian nation’s actual production capacity.
Traders confirm that ship-to-ship transfers of Iranian oil continue off the coast of Malaysia. Jianan Sun, an analyst at Energy Aspects, remarked, “Most Iranian crude shipments to China via STS still occur in Malaysian waters.”
Kpler’s analysis group reports that in the first ten months of this year, China imported over 57 million tons of crude oil originating or suspected to originate from Iran, averaging around 1.37 million barrels per day. Of this, more than 51 million tons were transported via ship-to-ship transfers, a method often used to conceal the oil’s true origin.
Pankaj Srivastava, Senior Vice President at Rystad Energy, suggests that U.S.-Indonesia energy cooperation and plans to build 17 refineries in Indonesia could make the country a more flexible supply source than Malaysia. However, he warns that such activities may face frequent paper adjustments if monitoring is tightened.
These developments highlight how global oil trade is significantly influenced by international sanctions and financial oversight. Relabeling oil origins may remain a major challenge for regulators, especially as transactions are conducted through hard-to-monitor ship-to-ship transfers, which are common in ensuring stable energy supplies for major importers like China.
Source: Reuters
