Iran, China and an array of middlemen have evaded U.S. sanctions for years by shipping oil on aging tankers with opaque records and transferring cargoes between ships at sea, all to avoid scrutiny and legal liability.
U.S. forces boarded one such sanctioned tanker that has frequented China and Iran as it sailed on Tuesday through the Indian Ocean, roughly midway between Sri Lanka and Indonesia.
The interception of the stateless M/T Tifani, along with the U.S. blockade of Iranian ports, is part of a forceful effort to thwart a secretive oil trade that has flourished for years and largely thrived after nearly two months of war.
“It’s like you’ve been driving the same road every day and you see one person in the HOV lane over and over and over, and finally you see one that gets pulled over,” said Raymond Powell, director of the SeaLight project at Stanford University which tracks Chinese maritime activity.
The Tifani is just one vessel in the so-called shadow fleet that sustains Iran and its oil trade with China, its No. 1 customer. There are more than 500 ships in the shadow fleet that serves Iran, according to United Against Nuclear Iran, or UANI, a U.S.-based advocacy group.
This elaborate evasion system includes a substantial amount of Iranian oil already at sea and far from the Middle East. If the U.S. continues to target this floating supply, it could cut into an important source of income for the Iranian regime. Without that financial cushion, Tehran would find it much harder to sustain the war and drag out talks to end it.
Iranian crude already at sea is an important buffer for Iran’s ability to export oil. More than 160 million barrels of Iranian crude and condensate are currently stored on floating tankers, waiting to be delivered, according to ship-tracking company Vortexa. Among those, at least 140 million barrels are beyond the blockade zone, according to Emma Li, lead China oil-market analyst at Vortexa.
The 1,080-foot, bright-orange Tifani had loaded at Iran’s Kharg Island on April 6 and was on its way east when it was intercepted, according to UANI. Tracking data show the tanker made at least 10 visits to Chinese ports since late 2022, according to SeaLight.
The U.S. State Department, when it placed sanctions on the Tifani in 2025, highlighted an essential element of efforts to obscure the origin of Iranian oil—noting that the Tifani had been involved in ship-to-ship oil transfers with other sanctioned ships in waters east of Singapore.
Waters in that area off the southern tip of Malaysia are a hub for shadow-fleet activity, according to maritime security experts. After ships pass through the narrow Malacca Strait, the relatively calm seas provide an ideal spot to move oil between vessels. The transfers often happen outside Malaysia’s territorial waters, where its jurisdiction and capacity for enforcement are limited.
These transfers explain why, on paper, China hasn’t imported Iranian crude since 2022, according to China’s General Administration of Customs. However, analysts estimate that China imports around 1.4 million barrels a day from Iran, accounting for roughly 12% of its total imports.
For Beijing, the world’s top oil importer, Iran offers a discount supply of crude to help satisfy its huge demand. For Tehran, China’s purchases are a critical lifeline to keep its sanctioned economy afloat.
Most of those Chinese imports are masked as originating in Malaysia and Indonesia. In the past three months, China imported 93 million barrels of oil from Malaysia and 77 million barrels from Indonesia, according to general customs data. Those numbers exceeded the past production levels of the two countries.
Recent transformations of the Tifani illustrate how shadow-fleet tankers try to move under the radar. The 23-year-old ship was built in Malaysia and was operated by a Malaysian state conglomerate until 2020, when a series of modifications began, according to the shipping database Equasis.
Since then it has cycled through four names and several flags, including Cameroon, Palau, Panama, St. Kitts and Nevis and Tanzania. It was most recently listed as “stateless.”
The ship’s owner since 2022, World Crew Provider, listed an address in Suriname, while its commercial manager’s address was in Mumbai. The owner didn’t reply to a request for comment.
A previous interdiction caught the attention of China, which criticized the U.S. after American forces fired upon and seized an Iranian containership on Sunday. That ship, the MV Touska, had visited the Chinese port of Zhuhai twice last month before its return voyage. It is part of a fleet of Iranian state-controlled vessels that have been accused of shipping rocket-fuel precursors to China.
President Trump said on Tuesday the U.S. had seized a ship with ties to China. He suggested it had material useful to Iran’s war effort and seemed to chide China’s leader, Xi Jinping. Trump didn’t say if the ship was the Touska.
“We caught a ship yesterday that had some things on it, which wasn’t very nice,” he said in an interview with CNBC. “A gift from China perhaps, I don’t know, but I was a little surprised, because I have a very good relationship and I thought I had an understanding with President Xi. But that’s all right. That’s the way war goes, right?”
China played down its connection to the containership. “As far as I know, the vessel seized by the U.S. is a foreign containership,” Foreign Ministry spokesman Guo Jiakun said on Tuesday. “China rejects any false association and speculation.”
Beijing doesn’t uphold U.S. sanctions, calling them illegal.
Up to half of China’s oil imports come through the Strait of Hormuz and more than half through the Malacca Strait. Former Chinese leader Hu Jintao called this vulnerability to chokepoints the “Malacca Dilemma,” and it helped drive China to diversify energy sources.
China has a large strategic oil surplus—and is also insulated by the supplies of Iranian oil now at sea. Iranian oil on waters outside the blockade zone could supply China’s demand for approximately 2½ months, Li said.
The expansion of U.S. interdictions thousands of miles beyond the blockade of Iran’s ports “has to change the risk calculus for the people who are involved,” said Powell. “If you’re on a flag of convenience or in this case, a stateless tanker, you now have to think about this other thing which is you could be out in the middle of the Indian Ocean and all of a sudden helicopters could drop from the sky.”
It takes approximately 10 days for ships to travel to the Malacca Strait from Iran. The impact of the blockade and just how many vessels have managed to breach it will become more obvious in a few days when vessels turn their signals back on as they reach their destinations, said Charlie Brown, a former U.S. Navy officer and senior adviser for UANI.
“The big test will come this week, as we see if there is any significant change in the number of laden tankers arriving in Malacca Strait,” he said.