China helps Iran evade sanctions with illicit activity at sea

With support from China, Tehran continues to circumvent international sanctions by selling millions of barrels of oil to Chinese refineries and engaging in very short ship-to-ship transfers in Iranian waters with renamed vessels.

Iran maintains multiple centres and networks of individuals and companies across East Asia that help deliver oil and petrochemical products to China.

In April, Iran was exporting up to one million barrels per day (BPD) of its oil, while overall oil production was restored to the pre-sanctions level of 3.8 million BPD, AFP reported.

Some oil is delivered on Iran-flagged ships by companies under US sanctions, including the National Iranian Oil Co. (NIOC) and the National Iranian Tanker Co. (NITC).

The NITC is affiliated with the Islamic Revolutionary Guard Corps (IRGC).

In its efforts to sell oil and dodge the sanctions that have targeted its petroleum industry and the IRGC and affiliated companies, Iran has employed other strategies as well.

These include the use of vessels that operate under the flags of other countries, ship-to-ship cargo transfers in open water and attempts to conceal oil exports, according to numerous reports.

Other deceptive practices include tampering with or deactivating a ship’s automatic identification system — a collision avoidance system that continuously transmits a vessel’s location at sea — so its route “goes dark”.

Tanker tracking companies say China is the destination of most of those shipments, Reuters has reported.

At the same time as it engages in deceptive shipping practices, the Islamic Republic has continued to threaten oil vessels in the Strait of Hormuz with acts of piracy.

In a mid-July report, however, the Central Bank of Iran (CBI) stated that although Iran’s revenues from oil and other exports have increased, the rate of capital flight is on the rise.

The CBI report said in the fiscal year that ended March 20, Iran’s revenues from exporting oil, gas and petroleum products reached almost $39 billion, $17 billion more than the previous fiscal year, when oil prices were much lower.

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