Iran shipped $6 billion worth of oil to China using shadow fleet during brief US blockade pause: Report

Iran is estimated to have exported between $5 billion and $6 billion worth of crude oil during the brief period when the United States eased its blockade on Iranian oil shipments, according to estimates by United Against Nuclear Iran (UANI) and oil analysts cited by The Wall Street Journal.

Following the temporary US-Iran agreement signed on June 17, Washington eased restrictions on Iranian oil shipments for nearly a month. Tehran swiftly moved to capitalise on the opportunity by accelerating crude exports.

Beginning in late June, around 20 Iranian oil tankers sailed toward waters off Malaysia's east coast, carrying crude destined for buyers in China, analysts said.

Among the first vessels to leave Iran were Diona, Hero II, Sonia I, and Stream, with China identified as the final destination for the shipments.

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Ship-to-ship transfers helped evade sanctions

According to analysts, Iran continued using its long-established method of avoiding US sanctions.

Tankers carrying Iranian crude sailed to the Eastern Outer Port Limits, an area outside Malaysia's territorial waters that serves as a key transfer point between Iran and China.

There, the crude was transferred at sea through large hoses onto other oil tankers. These vessels then transported the oil to China's independent "teapot" refineries, which typically purchase sanctioned Iranian crude at discounted prices.

The ship-to-ship transfer process makes it significantly more difficult for US authorities to track and enforce sanctions on Iranian oil exports.

Nearly 70 million barrels shipped during one-month window

Analysts estimate that Iran exported around 50 million barrels of crude in the second half of June alone—roughly equivalent to its usual monthly oil exports to China before the conflict.

Between mid-June and mid-July, when the US blockade was temporarily eased, Iran is estimated to have shipped nearly 70 million barrels of oil, valued at approximately $5 billion to $6 billion, according to UANI and analysts quoted by The Wall Street Journal.

Oil revenue critical for Tehran

Jonathan Panikoff, Middle East expert at the Atlantic Council, told the newspaper that Iran's struggling economy made the oil exports particularly significant.

"Iran's economy is in its worst shape since the revolution, so every dollar of revenue matters," Panikoff said. "The regime is likely to prioritise revenue for their own strategic purposes — chief among them right now is fighting the US."

Analysts said the sharp increase in Iranian tankers arriving in Asian waters during July suggests Tehran could continue receiving billions of dollars in oil revenue over the coming months.

Charlie Brown, a Singapore-based analyst with United Against Nuclear Iran, said the temporary easing of restrictions allowed Iran to build up a substantial export buffer.

"If they had left the blockade on, the pinch would likely have hit about now. But once the blockade lifted, Iran quickly surged more oil, so there is a big buffer again," Brown said.

US restores blockade

The United States has since reimposed its blockade of the Strait of Hormuz, once again restricting Iran's ability to export crude oil and tightening pressure on Tehran's energy revenues.