Iranian crude bypasses sanctions via Malaysian transshipment hub serving Chinese refiners

Around 72 km off the coast of Johor, the Eastern Outer Port Limits has become a key transshipment point for Iranian crude, where tankers off-load oil onto other vessels that then deliver it to various customers, notably smaller independent Chinese refineries that purchase the fuel at prices far below the open market. Tracking these ships is difficult for US officials because many disable tracking systems, masquerade under foreign registries or change names, and sometimes transfer oil while still at sea; the location also lies beyond Malaysia’s territorial waters, limiting local enforcement.

Malaysian supply firms play a crucial role, providing food, water, fuel and experienced captains, often paid in cash or cryptocurrency, and they aim to leave no paper trail linking them to the deals. Some operators, like captain Eddie Effendi, claim their companies refuse such work, but competitors accept the higher profits despite the risk of US sanctions. In August, the US Treasury broadened sanctions to include companies that facilitate the provisioning, transport or financial transactions of these tankers, which could cut off their access to dollar payments and banking services. Malaysia does not acknowledge the sanctions and seeks to stay neutral while preserving its relationships with Iran and China, raising doubts about the effectiveness of US efforts to curb Iran’s oil exports.