China Accused of Buying Iranian Oil in Bulk Through Ghost Fleet in South China Sea

The British newspaper “Daily Mail” reported on June 20 that according to intelligence experts’ warnings, a “ghost fleet” evading international sanctions is shipping Iranian oil to China to finance Iran’s nuclear program. Reuters also adopted a report on the change in the volume of oil purchased by China on the same day, pointing out that the cause of the fluctuations does not exclude an Iranian element. As of now, there is no official response from China and Iran for the time being.

Reuters reported on June 20, citing customs data, that China’s oil imports from Saudi Arabia fell 21 percent in May compared to the same month a year earlier, though it still ranked first among suppliers for the ninth consecutive month. China’s exports from Saudi Arabia were 7.2 million tons, or 1.69 million barrels per day, last month; they were 6.47 million tons in April and 9.16 million tons in May 2020, data from China’s General Administration of Customs showed. In addition to Saudi Arabia, China’s oil imports from Russia, its second largest supplier, also fell from a month ago to 5.44 million tons, or 1.28 million barrels per day. The scale of the contraction in the volume of oil obtained from Saudi Arabia and Russia, its two largest suppliers, is consistent with the rapid decline in China’s total crude oil imports this year. And last month, oil imports from the United Arab Emirates fell 25 percent from a year earlier.

Reuters said the reason behind this may be that Iranian oil shipments have gradually slowed from their peak at the beginning of this year as Tehran renews its nuclear deal with various countries, due to the record volume of oil sold by Iran since the end of 2020, with Iranian oil being disguised as crude from other sources, such as products labeled as UAE and Oman.

“The Daily Mail reports that, according to intelligence experts, a “phantom fleet” evading international sanctions is delivering Iranian oil to China to fund Iran’s nuclear program, and that Iranian ships have been caught cheating: manipulating geographic positioning systems to show their location as a non-prohibited area. Iranian ships were also found to be cheating: manipulating geographic positioning systems to make their locations appear as off-limits areas. The newspaper also cites United Against Iran’s Nuclear Program, an international nonprofit group led by former U.S. Ambassador to the United Nations Mark Wallace, as saying that China has defied the ban and increased its clandestine offshore dealings with Iran over the past six months to fund Iran’s nuclear activities.

“The Daily Mail reports that according to United Against Iran’s Nuclear Program, as of April, China was buying an average of 700,000 barrels per day of illegal Iranian oil, with a peak of 1 million barrels per day, making it Tehran’s main customer. “The “ghost fleet” is now believed to be in the South China Sea: Between February and May, United Against Iran’s Nuclear Program successfully applied for seven ships in the fleet, including 20 supertankers capable of carrying more than 2 million barrels of oil. The fleet will be able to transport nearly 100 million barrels of crude oil or fuel oil and nearly 12 million barrels of liquefied petroleum gas, with a total value of 5.5 billion pounds. “United Against Iran’s Nuclear Program says it has successfully deregistered the ships after the fact.

In light of this, Ivor Roberts, a senior adviser to the group and former head of counter-terrorism at the Foreign Office, said that if only one sixth of the fleet’s tankers were able to evade detection and complete a weekly shipment, Iran would be able to export 2.4 million barrels of oil a day, which is 300,000 barrels more than before the sanctions. He added: “China buys a staggering amount of black market oil from Iran. This offers the Tehran regime the possibility of building up reserves and being able to strengthen its nuclear program in the face of international sanctions” and that “this shadowy alliance is a challenge to the West and has potentially huge implications for our security.”

The customs database also showed that China’s oil imports from Malaysia, which has been a key transit point for Venezuela’s heavy blend crude, rose 3.6 percent year-on-year to 1.04 million tons, Reuters said. Oil imports from Caracas have been zero from official figures since October 2019, as PetroChina has been under U.S. sanctions over fears. However, analysts say Venezuelan oil has made its way to China, where they continue their journey after transshipment in Malaysia, where they are shifted into a Malaysian bitumen blend. Finally, oil imports from the United States reached 1.07 million tons, almost twice the level of the same period last year.