How Malaysia helps keep Iran’s oil smuggling operation afloat

“Are you aware that your activities are funding the Iranian regime’s terror at home and abroad?” I ask the Iranian captain, with whom I’ve established radio communications after hailing his vessel in Persian.

I’m on an inconspicuous supply vessel in the Malaysian Exclusive Economic Zone in the South China Sea – known as the Eastern Outer Port Limits (EOPL).

Since the outbreak of the Iran War, the world has been laser focused on Strait of Hormuz and the Baab al Mandab, but the EOPL – under Malaysian jurisdiction – is just as important.

The EOPL is operating as the backyard for Iran’s Dark Fleet and a critical artery of its illicit oil smuggling network. Iran’s sanctions evasion operation works as such: tankers load crude from Iranian ports like Kharg Island and head toward Asia. Their most important stop is the Malaysian EOPL anchorage. This area has become the world's top hotspot for illicit ship-to-ship transfers and long-term floating storage. Here, Dark Fleet tankers transfer sanctioned crude with their tracking signals turned off to mask the oil's origin. After one or a sequence of transfers – and sometimes even blending different sanctioned crudes together right in the anchorage – the oil is rebranded "Malaysian Blend." Almost all of this oil heads to China. Small, quasi-independent Chinese refineries buy the crude at steep 10 to 12 dollar per barrel discounts, keeping the Iranian regime’s economy afloat through an off-the-books supply chain.

But the money doesn’t get spent on the Iranian people. Instead, it serves as the main source of funding for the Islamic Revolutionary Guard Corps (IRGC). To put the scale into context: Iran’s Dark Fleet amassed a total of $46 billion last year. This revenue fuels the IRGC’s suppressive apparatus at home and terror machinery abroad.

For too long, Iran’s Dark Fleet has acted with impunity in the Malaysian controlled EOPL. This is precisely why I’m here as part of United Against Nuclear Iran’s Marine Tanker Tracking Team combating U.S. sanctions evasions.

UANI has identified almost all ships belonging to Iran’s Dark Fleet through satellite technology and automatic identification system data (AIS) – a mandatory maritime identification system that the Iranians frequently manipulate or switch off. But there is only so much intelligence you can gather from the sky, which is why we’re carrying out a firsthand maritime investigation at sea. Our mission is to track down and document Iran’s Dark Fleet in-person, identify their behavioural patterns and, perhaps most importantly, document inescapable US sanctions evasion in real-time.
It takes about five hours to reach the EOPL from our departure point in Singapore. The journey starts off remarkably quiet with little activity in sight. But travel 100 nautical miles offshore from the Singapore Strait into Malaysian waters and you encounter what can only be described as floating Iranian city. We are surrounded by loitering Iranian and other dark fleet vessels. I’m shocked to see how these ships brazenly operate in plain sight.

Unaware of our identity, the captains and crew initially appear pleased to see us – some even come out to greet us, smiling and waving above deck. However, as we unveil our UANI flag, I begin communicating with the Iranian captains in Persian, making it clear they are in direct violation of US sanctions. The mood suddenly shifts. The vessels begin notifying each other of our presence and the crews attempt to retreat into the shadows. It is clear that the Dark Fleet is not used to this level of scrutiny, nor is it comfortable with it. In one case, an Iranian captain almost falls to his knees after scrambling inside his cabin to avoid being captured on camera by our drone documenting the ships.

To be clear: Malaysia can and should intervene. In fact, Malaysian maritime authorities do not mess around with illicit activity in their waters when it comes to foreign fishing boats. But when it comes to Iranian super tankers that fund IRGC terror, or Iranian cargo ships likely transporting designated contraband from China, they willingly turn a blind eye.

But Malaysia’s enabling of the Iranian regime doesn’t stop there.

The floating Iranian city in the EOPL cannot survive without bunkering fuel and supplies. Unlike cars, supertankers and cargo vessels cannot simply sit indefinitely at anchor without consuming fuel. They keep their engines running and they require fuel to power essential onboard systems. That makes bunkering – the delivery of fuel to ships – a critical part of keeping these vessels operating while they wait offshore.

We identified and approached dozens of smaller bunker fuellers close to Malaysia’s Pengerang Integrated Petroleum Complex (PIPC) on standby to provide Iranian vessels with the fuel they need to operate. In other words, Malaysian bunkering vessels and fuel from places like the PIPC are providing the lifeblood to the Iranian regime’s lifeline. Tehran would have no Dark Fleet without this support.

If there was one key takeaway from our maritime investigation in the EOPL, it’s that Malaysia must be the next target of the economic campaign against the Iranian regime. It is providing life-support to an enemy that is not only attacking the US, Israel and our Gulf partners in the Middle East, but one that is plotting terror on British streets.
The US and its allies – not least Britain – should impose immediate consequences on Malaysia. The Pengerang Integrated Petroleum Complex should be sanctioned, as should other Malaysian entities sustaining the Iranian regime.

Put simply: Malaysia has had a free pass for too long – it’s time for action against it.
 

Kasra Aarabi is the director for IRGC research at United Against Nuclear Iran and a British-Iranian expert on Iran’s military-security apparatus