Iranian oil tankers go dark off Malaysia as scrutiny from US sanctions intensifies

Oil tankers operating near eastern Malaysia, a central location for transferring Iranian crude bound for China, are increasingly vanishing from digital tracking systems. 

In recent months, a growing number of tankers have begun switching off their transponders as they approach Malaysian waters. This region has long served as a hub for ship-to-ship transfers of Iranian oil, where previously such operations could often be observed through public tracking systems that indicated when vessels were anchored side by side. Now, however, ships are routinely “going dark” to avoid detection, Caliber.Az reports, citing Bloomberg's recent article.

While disabling transponders is not a new practice, its frequency has surged in Malaysia, complicating efforts to monitor the flow of Iranian crude. The White House has repeatedly condemned the Iranian oil trade, asserting that it provides vital revenue to Tehran-backed militant groups, including Hamas. In response, Washington has sought to disrupt the trade through sanctions targeting vessels, ports, and refineries involved in transporting Iranian oil.

“Ship-to-ship transfers have been used to mask the origin of those cargoes,” explained Muyu Xu, a senior crude oil analyst at Kpler in Singapore. “Now they’re switching signals off for longer, so that it’s now even harder to trace those flows back to the source, which is Iran.”

One recent case involves the Vani, a very large crude carrier (VLCC) built in 2004 with a capacity of 2 million barrels. On May 15, the Vani, which is not currently under sanctions, signalled its position near eastern Malaysia before disappearing from tracking systems. It reappeared five days later, fully loaded with oil. According to vessel-tracking data compiled by Kpler and Vortexa, the Vani had conducted a ship-to-ship transfer with the Nora, a US-sanctioned tanker that had loaded crude at Iran’s Kharg Island export terminal on May 18. The Vani is now signalling its destination as Qingdao, China.

The registered owner of the Vani, Avani Lines Inc., based in the Marshall Islands, has no publicly listed contact information on the S&P Global-run Maritime Portal.

China’s independent refiners remain the largest buyers of Iranian crude, drawn by its heavily discounted prices, which help offset their typically narrow profit margins. Official Chinese customs data states the country has not imported oil from Iran since 2022. However, third-party data paints a different picture, indicating strong and sustained flows.

According to Kpler, China imported about 1.46 million barrels of Iranian oil per day in April. While this figure reflects a decline from March's five-month high, it marks a recovery from a dip that began late last year.

The Iran-to-China oil trade is also being sustained through other deceptive practices. Among them is the use of “zombie ships,” or tankers that assume the identities of vessels that have been scrapped, thus appearing legitimate to outside observers.

In April alone, at least six ship-to-ship transfers off Malaysia involved tankers that had disabled their transponders, according to Kpler. One such case involved the Celine, another US-sanctioned ship that had collected oil from Kharg Island. This represents a notable increase in activity — by comparison, only one ship went dark in the same month last year.

Although satellite imagery can help identify tankers conducting oil transfers, the method is time-consuming and heavily dependent on weather conditions. It involves matching satellite images of unknown vessels to known ships, a task that is labour-intensive and subject to error.

“It’s getting more and more difficult to track those sanctioned flows,” said Emma Li, a senior market analyst at energy intelligence firm Vortexa, during a client presentation in Singapore in early April attended by Bloomberg News.

By Tamilla Hasanova