\u201cteapot\u201d oil refineries<\/a>, according to Erica Downs, a senior research scholar at the Center on Global Energy Policy at Columbia University.<\/p>\n\u201cCrude oil bound for China from Iran involves ship-to-ship transfers in international waters, which can happen multiple times before reaching China, to disguise the crude\u2019s origins,\u201d she said.<\/p>\n
Unlike China\u2019s huge state-owned enterprises such as CNPC, Sinopec, and CNOOC, these small refineries are less exposed to the US financial system, which makes them more willing to buy discounted but sanctioned Iranian oil, she told Al Jazeera.<\/p>\n
Calm waters<\/p>\n
The anchorage area off Malaysia\u2019s EOPL area is \u201cjust as busy as it has ever been,\u201d said Charlie Brown, a maritime security expert and director of Southeast Asia Regional Programs at the Yokosuka Council on Asia-Pacific Studies (YCAPS).<\/p>\n
\u201cBefore the war and [throughout] all the different phases of the conflict, there\u2019ve been ships out there anchoring and conducting all kinds of different things like ship-to-ship operations.\u201d<\/p>\n
Spanning roughly the size of Hong Kong, the EOPL offers the advantage of calm waters that are close enough to reach suppliers in Singapore and Malaysia but far enough to make the area a historically grey legal one.<\/p>\n
The EOPL is outside Malaysia\u2019s territorial waters but within its Exclusive Economic Zone (EEZ), a designation that addresses issues like fishing rights and natural resource exploitation rather than sanctions compliance at sea. Malaysia\u2019s Maritime Enforcement Agency has said in the past that the area is challenging to patrol due to its remoteness and \u201cjurisdictional gaps\u201d.<\/p>\n
However, Kuala Lumpur has moved to strengthen its legal toolkit. In June, Malaysia amended its Exclusive Economic Zone Act to crack down on illegal anchoring, resupplying or \u201cbunkering\u201d, and ship-to-ship cargo transfers conducted in its EEZ without government approval.<\/p>\n
Malaysia\u2019s Ministry of Foreign Affairs did not respond to Al Jazeera\u2019s request for comment.<\/p>\n
Still, on any given day, as many as 200 ships may be anchored in the area, according to Brown \u2013 half of them likely having ties to Iran.<\/p>\n
Satellite data reviewed by Al Jazeera on Thursday showed that over the past month, 18 Iranian-flagged oil tankers, including the Humanity, arrived in the EOPL before going \u201cdark\u201d. Another Iranian oil tanker, the Dore, could be seen sailing through the Strait of Malacca towards the Middle East on Thursday and may have recently departed the area.<\/p>\n
Also present in the EOPL on Thursday were at least 50 US or EU sanctioned ships broadcasting an AIS signal, including three Iranian-flagged cargo and container ships. More \u201cdark\u201d\u00a0 ships are likely in the area, according to experts.<\/p>\n
The long arm of US law<\/p>\n
The sale of Iranian oil being transferred between ships there is facilitated by China\u2019s Cross-Border Interbank Payment System, which also allows oil payments to be made in renminbi outside the US-monitored SWIFT network, according to Geopolitical Intelligence Services, a global forecasting consultancy based in Europe.<\/p>\n
China does not officially acknowledge purchases of Iranian oil, and a spokesperson at the Chinese embassy in Washington, DC told Al Jazeera they were unfamiliar with the transit of Iranian oil through the EOPL to China.<\/p>\n
China\u2019s Ministry of Foreign Affairs has repeatedly said in the past that it opposes \u201cillegal unilateral sanctions\u201d imposed by the US and its use of \u201clong-arm jurisdiction\u201d that lacks a basis in international law.<\/p>\n
However, Chinese customs data offer some clues about the origin and movement of cargoes through the EOPL, according to Downs of Columbia University.<\/p>\n
\u201cLast year, Iran exported about 1.4 million barrels per day to China, yet Chinese customs reported no oil imports from Iran. At the same time, Chinese customs data shows that China\u2019s imports from Malaysia at times greatly exceed Malaysia\u2019s oil production, which indicates that a portion of the crude originated somewhere else,\u201d she said.<\/p>\n
Beijing, for its part, has moved to protect its domestic refineries from the US legal system.<\/p>\n
After the US Department of the Treasury sanctioned five \u201cteapot\u201d refineries in late April over their purchases of Iranian oil, China\u2019s Ministry of Commerce \u201cblocked\u201d the order, arguing that the sanctions were \u201cin violation of international law and the basic norms governing international relations\u201d and lacked \u201cUN authorisation and basis in international law\u201d.<\/p>\n
Beijing has yet to respond to new sanctions imposed this week by the US Treasury on six oil tankers that, it says, transported Iranian oil to China and five companies registered in China and Hong Kong it claims are associated with Iran\u2019s \u201cshadow fleet\u201d.<\/p>\n
While the purchase of Iranian crude oil by Chinese refineries has fallen by about 40 percent since the war began, according to US Treasury Secretary Scott Bessent, experts say networks like the EOPL have kept the rest of the oil sales flowing.<\/p>\n
\u201cSanctions never stopped any of this. The market mechanism, the payment mechanism, evolved because of the sanctions, but it never stopped anything,\u201d said Brown from YCAPS. \u201cThe only thing that physically stopped oil from going from Iran to China is the blockade.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"On Saturday last week, the Iranian oil tanker Humanity sailed through the Straits of Malacca and Singapore before…\n","protected":false},"author":2,"featured_media":793064,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[18],"tags":[23,1204,144,801,1205,129,3,21,19,22,20,25,231941,24],"class_list":["post-793063","post","type-post","status-publish","format-standard","has-post-thumbnail","category-united-states","tag-america","tag-asia-pacific","tag-china","tag-iran","tag-malaysia","tag-middle-east","tag-news","tag-united-states","tag-united-states-of-america","tag-unitedstates","tag-unitedstatesofamerica","tag-us","tag-us-israel-war-on-iran","tag-usa"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/793063","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=793063"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/793063\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/793064"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=793063"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=793063"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=793063"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}