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ANALYSIS

Shadow fleet sustains Iran’s oil flows but sanctions drive up costs

Dalga Khatinoglu
Dalga Khatinoglu

Oil, gas and Iran economic analyst

Aug 10, 2025, 06:47 GMT+1Updated: 04:47 GMT+0

Tanker tracking data obtained by Iran International shows sharp fluctuations in Iranian oil discharges at Chinese ports this year, alongside a steep rise in floating oil stocks.

The United States intensified enforcement of sanctions on Iranian oil exports in October 2024 after Iran’s second missile strike on Israel, though broader measures have been in place since the Trump administration.

Despite these efforts, exports remain substantial, but a growing gap between crude loaded in Iran and volumes discharged in China suggests mounting logistical challenges.

According to energy consultancy Vortexa, Iran’s crude exports fell by 480,000 barrels per day (bpd) in July from June, to 1.5 million bpd.

Data from Kpler, which separately tracks loadings from Iranian terminals and discharges at Chinese ports, confirms the volatility.

Since January, Iran has on average loaded 200,000 bpd more than has been offloaded in China, swelling floating storage from 5 million barrels in early January to 33 million barrels by late July.

China remains the only major buyer of Iranian crude.

Crackdown: limited impact

The United States has in recent months targeted dozens of tankers from the so-called “ghost fleet” and blacklisted front companies.

The US Treasury also sanctioned a major sales network run by the son of former national security chief and supreme leader adviser Ali Shamkhani.

Claire Jungman, Director of Maritime Risk & Intelligence, said that despite expanded enforcement, Vortexa data shows little immediate impact on July volumes.

“Iran’s crude continues to flow via shadow fleet operations involving disabled AIS tracking systems, falsified vessel identities, and ship-to-ship (STS) transfers,” Jungman explained.

“On August 1, Malaysian authorities announced a crackdown,” she added. “While this may complicate Iran’s logistics and raise operational costs, similar measures by Malaysia and Indonesia in the past have had only limited and temporary effects.”

Vortexa expects exports to remain resilient in the short term, supported by Chinese demand and adaptable logistics.

Opaque trade, sanctions costs

Still, sanctions are costly: central bank, customs, and tanker-tracking data suggest roughly one-fifth of oil income is lost to evasion costs, including discounts.

In mid-July, delivered Iranian crude to China traded at $4/b below Brent, compared with $2/b in May.

Official trade figures remain murky.

Iran’s customs agency counts gas condensate as a “non-oil” export, reporting $3.5 billion in such exports to China in spring 2025—nearly equal to imports from China in that period. But Chinese customs data for the first half of 2025 lists only half that figure from Iran—with oil imports officially at zero.

The discrepancy likely reflects China omitting sanctioned goods such as petrochemicals and metals from official tallies, while Iranian authorities include them.

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