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

The ships receiving the oil are often part of Iran’s “shadow fleet,” a fleet of old, rusting tankers that obscure their owners and may switch their flags to those of countries with little oversight.

Iran's "shadow fleet" consists of approximately 20 old, rusting tankers that have been used to evade US sanctions. These ships often switch their flags to those of countries with little oversight, such as Panama or Liberia. According to the Wall Street Journal, the ship-to-ship transfers have allowed Iran to export around 200,000 barrels of oil per day to China. This clandestine operation has been ongoing since 2020, with the Iranian government denying any involvement.

The evasion of US sanctions by Iran has a direct impact on global oil prices, which in turn affects the price of gas at the pump. As a result of this clandestine operation, gas prices may be lower than they would be if the sanctions were fully enforced, with some estimates suggesting a reduction of up to 5 cents per gallon. This can have a significant impact on households that rely heavily on gasoline for transportation. The cost savings can also affect the overall economy.

The use of "shadow fleets" by Iran is not a new phenomenon, with the country having employed similar tactics in the past to evade sanctions. Insiders know that the Iranian government has been working to expand its oil exports to China, which has been willing to turn a blind eye to the sanctions. The relationship between Iran and China has been growing stronger in recent years, with China becoming one of Iran's largest trading partners. This has allowed Iran to maintain a significant portion of its oil exports despite the sanctions.

The US government is expected to release a report on the effectiveness of its sanctions on Iran by the end of the quarter. The report will likely include details on the extent to which Iran has been able to evade the sanctions through the use of its "shadow fleet". A surprising fact is that some of the ships involved in the ship-to-ship transfers are actually owned by Chinese companies, which has raised questions about the level of involvement of the Chinese government in the operation.