Iran's Shadow Fleet. How tankers bypass sanctions and transport oil at sea

The economic sanctions imposed on Iran by the United States and their allies, which are part of the political pressure on Tehran, were intended to limit oil exports – one of the pillars of the Iranian economy. However, in practice, they have led to the creation of an extensive raw material transport system outside official trade channels.

One of its most important elements became the so-called " shadow float", i.e. tankers operating outside the formal navigation control system. It is at sea today that a significant part of Iran's oil trade is being carried mainly to customers in Asia.

Tankers under changed ‘identity’

One of the fundamental mechanisms used by Iran is the exploitation of oil tankers with unclear ownership structure. These units often change the name, flag and formal operator, making it significantly difficult to identify their actual origin and links with the Iranian oil sector.

In practice, this means the operation of ships belonging to an extensive network of companies registered in different jurisdictions. Such solutions limit risk of detention units in ports of enforcement.

Some of these tankers remain outside the standard insurance and classification system. This raises growing concerns about the safety of shipping and the possible effects on the marine environment.

Deactivation of AIS

An important part of the activity of the shadow float is the manipulation of the AIS system, which normally allows monitoring of ship traffic.

Tankers carrying Iranian oil often disable AIS transponders on route passages, especially when approaching loading ports in Iran or during offshore transhipment operations. As a result, their actual position remains invisible to vessel traffic monitoring systems for some time.

Upon re-activation of the AIS, units often appear in a completely different location, making it difficult to trace the actual route.

Oil handling at sea

TransCargo offshore oil between tankers (STS operation) – mechanism often used by tankers of the so-called shadow fleet. It involves transferring cargo between two units outside ports, most commonly in international waters.

In such a scenario, the ship loaded in Iran's port shall transmit oil to another unit which then continues to transport already under another flag or with another transport document.

Such operations often take place in high-traffic areas where identification of individual units is difficult. Additionally, the use of disabled AIS systems complicates their monitoring even more.

Orientation Asia – main market

Much of the oil thus transported reaches Asian markets. In practice, the largest recipient remains entities related to the Chinese energy sector, which use the price reductions offered via Iran.

Through the use of the "shadow float", Tehran is able to maintain oil exports at a level that reduces the impact of economic sanctions. From the perspective of the authorities in Tehran, this means retaining part of the budget revenue and maintaining the continuity of sales of raw material.

The sea as an area of circumvention

This shows that the sea is increasingly becoming an area where countries are trying to circumvent economic constraints. At the same time, every crisis in the Gulf region recalls how much world trade – and especially oil transport – remains dependent on the safety of one of the most important shipping routes for the world economy.

In practice, this also means that political decisions on sanctions and escalation of tensions in the Middle East quickly translate into fuel, transport and energy prices that are felt by ordinary consumers around the world. It is worth remembering that the U.S. did not declare war on Iran because according to the American legal system this would require Congress's approval. However, they will probably never do that, because it would require a formal confession to attack another country – in this case Iran.

Tensions in the Gulf region affect not only oil exports, but also one of the world's most important shipping routes. The strategic importance of the Ormuz Strait and the consequences of the restrictions on the movement of tankers was further described in our earlier article (link to text).

In this context, the activity of the so-called "shadow floats" is of additional importance. For Iran, maritime transport today remains one of the key means of maintaining exports of energy resources despite the sanctions in force.