The Wall Street Journal reports:

In this nautical no-man’s-land 45 miles off the coast of Malaysia, tankers laden with sanctioned Iranian oil sit low in the water, waiting to offload their cargo to vessels bound for Chinese refineries.

They lower tarps and other objects over the names on their hulls and use black paint to conceal identity numbers. They’re here to carry out an elaborate deception: offshore trysts known as ship-to-ship transfers, in which one vessel offloads sanctioned oil onto another to help obscure the oil’s origins before it is sent on to Iran’s biggest customer.

These clandestine oil transfers reveal a key strength of the Iranian regime and a major reason why it has been able to hold firm for so long against American pressure: Iran can still sell its oil. In negotiations, the U.S. has so far resisted lifting oil sanctions against Iran. But the regime’s workaround is still bringing in crucial hard currency.

The Wall Street Journal recently observed this up close. On a May 8 visit by boat, Wall Street Journal reporters watched as the Catalina 7, an aging vessel sanctioned by the U.S. for carrying Iranian crude, transferred oil through a thick hose with a ship whose name was covered by black paint.

The ships had lowered giant fenders between them to prevent the Catalina 7 from crushing the smaller ship as they rolled in the waves. Workers in orange vests and hard hats scurried around the Catalina 7’s deck during the transfer.

Old and rusting tankers like these form what maritime experts call the “shadow fleet,” a roving armada of hundreds of vessels that ferry oil for sanctioned regimes, including Iran and Russia. Iran relies on such tankers for nearly all of its oil exports. [Continue reading…]