The Malaysian Maritime Enforcement Agency (MMEA) says Iranian-linked tankers are exploiting “jurisdictional gaps” to conduct ship-to-ship transfers of US-sanctioned oil near Malaysia’s waters in the South China Sea.
According to a report by the Associated Press (AP), the operations take place about 70km from Johor in the Eastern Outer Port Limits (EOPL) area – which is one of the world’s busiest maritime trade routes and is about halfway between Iran and China, which buys about 90% of Iranian oil.
The AP report stated that the area is now a key hub for ship-to-ship transfers involving Iran’s “shadow fleet” – aging tankers that often operate with disabled tracking systems, false identities and opaque ownership structures to conceal the origins of crude bound largely for China.
The activity is said to be carried out to evade US energy sanctions imposed on Tehran, with US officials previously stating that Iranian oil exports rely heavily on service providers and ship-to-ship transfers operating near Malaysian waters.
MMEA director-general Rosli Abdullah acknowledged that many ship-to-ship oil transfers occur outside Malaysia’s territorial waters and in remote areas beyond radar coverage, especially in locations near maritime boundaries or international shipping routes.
“The selection of such locations is intended to exploit jurisdictional gaps and limit direct enforcement action by local authorities,” he told AP.
Although not illegal, Malaysia discourages ship-to-ship transfers conducted outside approved zones as these activities are harder to monitor, often involve older vessels, and carry a higher risk of oil spills far from port facilities where incidents can be more effectively managed.
US-based advocacy group United Against Nuclear Iran (UANI) said satellite imagery has shown 42 ship-to-ship transfers of Iranian oil conducted in the EOPL area since Feb 28, when the US and Israel attacked Iran, starting a war in the Middle East.
UANI adviser Charlie Brown said Malaysia’s “inaction” is facilitating the business model by Iran and China and “dark fleet actors”, warning that Malaysia is becoming “a facilitator rather than merely a transit point” for illicit activity.
However, Rosli said UANI’s allegations did not align with the “actual situation on the ground” and did not reflect the operational realities of maritime enforcement conducted by MMEA, adding that the lack of real-time intelligence-sharing among domestic and international agencies also hampered effective action.
Rosli said enforcement is conducted strictly under Malaysian law and relevant international conventions, and authorities have “never compromised nor provided any special treatment or privileges to any country.”
Neither the Iranian embassy in Kuala Lumpur nor the Iranian mission to the United Nations answered AP’s requests for comment. The US state department declined to comment.
Though the area where the oil transfers are taking place is widely regarded as part of Malaysia’s broader economic zone, it borders the Riau archipelago, which is Indonesian territory.
Indonesia’s foreign ministry spokesman Yvonne Mewengkang told AP that Indonesian authorities were reviewing the situation to determine the legality of the activity.