PRESIDENT-ELECT Donald Trump is expected to resume his “maximum pressure” campaign against Iran when he returns to office in January, but attempts to choke the Islamic Republic’s oil exports would be complicated by sophisticated networks and a dark fleet* adept at skirting US prohibitions.

Iran’s exports of crude oil and condensates plummeted in 2019 after Trump reinstated sanctions during his previous tenure, but have since been gradually increasing, although they remain below pre-sanctions levels. 

According to data from tanker trackers at US advocacy group United Against Nuclear Iran, Tehran is exporting about 1.6m barrels per day of crude and condensate so far this year, compared with about 660,000 bpd during the first 12 months, after sanctions waivers expired in the spring of 2019. In comparison, Iran exported about 2.5m bpd of crude and condensates in 2017, data from commodities and analytics provider Vortexa showed.

Facilitating the rehabilitation of Iran’s exports is a fleet UANI’s tanker trackers say number over 450 oil and gas tankers (the quoted export figures exclude LPG), and a robust Chinese appetite for sanctioned barrels. According to UANI, over 85% of Iran’s exports this year were shipped to China.

There is much speculation over Trump’s policies vis-à-vis Iran, and the outcome of any sanctions expansion will hinge on a host of factors, including the scope and focus of any new policies, and the market’s — and especially Chinese importers — perception of the risk.

Analysts at TankerTrackers.com expressed scepticism that Iran’s exports will fall dramatically, and said the expected “eventual sanctions enforcement” by the Trump administration will see Iranian barrels sold at even deeper discounts than now.

“The dark fleet that handles these exports has grown many multiples; and most of the oil goes to China. It doesn’t seem likely that we’ll see a substantial drop in Iranian oil exports after Iran welcomed in hundreds of tankers into this oil trade,” the company said on X.

“The dark fleet continues to be a growing industry in itself thanks to Russia and Venezuela as well. It’s often the same tankers working all three markets.”

While the dark fleet’s growth has enabled Iran to continue exporting its oil, US sanctions create hurdles that ultimately increase costs and reduce Tehran’s revenues. According to UANI’s chief of staff Claire Jungman, a significant broadening of the sanctions regime, including sanctioning the entire Iran-trading fleet, could make sanctions evasion efforts “unsustainable”. 

“The dark fleet has expanded significantly over the years, which is a strategic response by Iran to dilute the impact of sanctions by distributing oil across a larger number of vessels, making it more challenging to halt all illicit trade,” she told Lloyd’s List.

“However, as we’ve seen over the last year, sanctions on individual vessels do disrupt trade. Even with a larger dark fleet, targeted sanctions lead to practical constraints such as decreased delivery capacity, increased operational costs, and fewer discharge ports.”

According to Jungman, an effective way for the administration to curb Iran’s exports would be to go after not only the networks and ships facilitating Iranian trades, but also service providers like brokers, flag states and classification societies. 

“Designating all the ghost fleet and these actors would create an environment where Iran’s capacity to sidestep sanctions becomes unsustainable,” she said.

While Iranian oil has continued flowing despite sanctions, the US upped the ante in mid-October, expanding its targeting scope and sanctioning 39 ‘ghost fleet’ tankers — including 14 very large crude carriers — totalling about 5m dwt. However, it was too early to assess the impact of this move, which was one of the most aggressive round of Iran shipping sanctions in recent years. 

Minimal US exposure could shield Chinese buyers

Tougher US sanctions under a Trump presidency would have minimal impact curtailing China’s Iranian oil imports, said Emma Li, China oil market analyst at Vortexa.

Since late 2023, the Biden administration has reinstated and gradually intensified Iran sanctions, largely by designating more ships, and their managers and registered owners. But this has not stopped China’s imports from rising, Li explained.

“These measures have complicated vessel transportation, causing more deceptive shipping practices, such as ship-to-ship transfers and AIS switching. But they won’t reduce long-term trade volumes — the oil still gets sold.”

According to Vortexa, China’s January-October Iranian crude imports rose 30% year on year, versus a 3.4% decline in the country’s other crude imports.

More stringent tactics would target Chinese buyers and banks facilitating deals, analysts said.

“Effectively reducing Iran’s illicit oil trade would require targeting intermediaries, such as Chinese and Emirati buyers,” said Xclusiv Shipbrokers analyst Dimitris Roumeliotis.

But Chinese buyers, all private firms, have already established sophisticated sanctions evasion payment channels over the past years, Li noted. 

Moreover, traceable buyers and refineries have minimal overseas exposure or assets vulnerable to US penalties, their parent companies or controllers have also insulated themselves from potential risks via complex ownership structures, she added.

One concern is the US extending sanctions to Chinese ports, said an executive at a state-owned Chinese tanker firm. “That’s easy to track.”

Indeed, citing people briefed on Trump’s plans and his top advisers, the Wall Street Journal reported on Friday that the president-elect is expected to quickly move to choke off Iran’s oil revenue and will target foreign ports and traders who handle Iranian oil.

Vessels carrying sanctioned oil, even designated ships, are routinely tracked calling at ports in China, especially Shandong Province, where most Chinese teapot refineries are located.

As trade chokepoints, ports also risk being designated under legislation introduced earlier this year that targeted facilitators of Iranian oil trade, although no Chinese ports have been directly sanctioned. 

Industry sources say many Chinese ports and terminals seem unaware of sanctions risks and lack precautions.

“They never check if an arriving ship is sanctioned, and it has caused them no problems so far,” Li remarked.

But designating individual facilities may have a limited impact. China could dedicate one or two terminals for Iranian oil, while compliant ships call many others, Li said.

However, imposing sanctions on an entire port would be very difficult. Terminals capable of accommodating large oil tankers in China are generally located within major, multi-purpose ports that handle a variety of goods and have enormous throughput.

Xclusiv’s Roumeliotis believes the Trump administration is unlikely to directly sanction Chinese ports over Iranian oil, as this could dangerously escalate tensions beyond the trade disputes.

“This approach could destabilise not only Chinese and Iranian energy security but also the global energy market, leading to significant turbulence. Instead of direct confrontation,” he said.

He believes the Trump administration would more likely rely on sanctions and diplomatic pressure aimed at companies involved in handling Iranian oil, rather than targeting nations directly.

“A direct interference in China’s energy supply could also jeopardise US relationships with allies and divert attention from its primary goal of pressuring Iran.”

Roumeliotis noted that Trump’s stance on sanctions could also depend on the global pump price at the time. “If the market is weaker, he may impose stricter sanctions on Russian and Iranian oil exports, though sanctions on Venezuela are less certain.”

Li believes that Trump’s harsh rhetoric and measures against Iran might initially make some Chinese buyers nervous, leading them to adopt more cautious strategies, such as increasing the number of STS transfers.

“This could temporarily extend logistics times, causing a drop in import volumes for a few months, but over time, business would return to normal.”

* Lloyd’s List defines a tanker as part of the dark fleet if it is aged 15 years or over, anonymously owned and/or has a corporate structure designed to obfuscate beneficial ownership discovery, solely deployed in sanctioned oil trades, and engaged in one or more of the deceptive shipping practices outlined in US State Department guidance issued in May 2020. The figures exclude tankers tracked to government-controlled shipping entities such as Russia’s Sovcomflot, or Iran’s National Iranian Tanker Co, and those already sanctioned.

Download our explainer on the different risk profiles of the dark fleet here