Shadow Shipping Empire: How Iran Engineered a Global Oil Sanctions Evasion Network Linked to Russia and China

Economic

Commodity

Summary:

An Iranian-linked maritime network has covertly facilitated the shipment of over 130 million barrels of sanctioned oil primarily from Iran, Russia, and Venezuela to China using a web of front companies, ship mortgages...

A Swiss Office, A Panamanian Broker, And A Maritime Loophole

In 2019, a well-dressed Iranian man named Saeed Alikhani walked into a law office in Zug, Switzerland, introducing himself as an accountant for Ocean Glory Giant, a commodity brokerage registered in Panama. His goal was to establish ship mortgage contracts a rare practice in illicit oil trading in which tankers themselves would be used as collateral for deals involving buyers in China.

Alikhani's proposal was deceptively simple: if Chinese buyers failed to pay for oil shipments, Ocean Glory would seize the tankers used in the transaction. Initially backed by invoices from Iraq and Malaysia, these mortgages were handled for at least nine ships and later passed on to other Swiss intermediaries. By 2023, the group had contracted mortgages on over 30 tankers worth nearly $1 billion, based on filings with Panama’s maritime registry.

Yet investigations by Financial Times and watchdog group C4ADS revealed that these ships primarily transported sanctioned oil from Iran, Russia, and Venezuela nations under heavy US sanctions. Many of the ships’ owners were shadowy Chinese nationals using unverifiable addresses and shared contact details linked to previously sanctioned entities.

A Network Built to Circumvent Sanctions

This structure part legal, part opaque used shell companies, nominal Swiss directors, and mortgage contracts registered in offshore jurisdictions like the British Virgin Islands. These contracts served as pseudo-financial guarantees replacing traditional letters of credit, which are generally blocked for sanction-prone oil trades.

The vessels were registered under seemingly unrelated entities like Chart Ocean in Hong Kong, while corporate filings tied back to individuals such as Li Yi, sanctioned by the US in 2019 for involvement with COSCO-linked shipping entities. Offices registered to these companies in Chinese port cities like Dalian were either abandoned or lacked any operational footprint.

By late 2024, at least 20 ships tied to Ocean Glory’s network were sanctioned by the US. Together, they had moved an estimated 130 million barrels of oil worth $9.6 billion of which nearly 50% came from Iran, 25% from Russia, and 20% from Venezuela. Astonishingly, 93% of this oil landed in China, mainly absorbed by its private refiners or “teapots,” which operate with limited state oversight.

AIS Shutdowns and Ship-to-Ship Transfers

These tankers frequently engaged in maritime deception strategies such as disabling their Automatic Identification Systems (AIS) and conducting ship-to-ship (STS) transfers in international waters. Notable examples include Russian Urals crude loaded from Primorsk and transferred near Spain, as well as Iranian crude shipped from Kharg Island before final delivery to Chinese ports.

The legal infrastructure helped mask these transactions. Mortgage contracts sometimes lasted only weeks, providing cover for a single shipment, while others remained active for years. Crucially, there is no indication that many of these contracts were ever legally canceled, suggesting a rolling system of asset-backed anonymity.

Exporting a Sanctions-Evasion Playbook

The case of Ocean Glory illuminates how Iran’s oil export strategy has evolved into a global doctrine. According to Claire Jungman of Vortexa, this goes far beyond merely selling oil. It’s a transfer of institutionalized know-how in sanctions evasion from contract structuring and regulatory arbitrage to maritime stealth tactics adopted now by Venezuela and Russia.

These developments reflect a causal relationship between enforcement gaps and proliferation of shadow logistics. As Western sanctions increase in scope but lack coordinated enforcement, actors with shared geopolitical interests are finding new ways to bypass barriers. The network’s sophistication layering legal, financial, and physical evasion tools challenges traditional sanction frameworks.

The China Nexus and Legal Grey Zones

China remains the key beneficiary of these shipments, importing up to 3.5 million barrels per day combined from Russia and Iran. While the Chinese government insists these are "normal and lawful transactions," the evidence shows a correlation between China's refining sector flexibility and the growth of these covert networks.

China’s reluctance to openly enforce sanctions against partners like Iran has created a permissive environment. Though not overtly complicit, the country's tolerance coupled with weak enforcement has enabled this network to thrive in the grey zones of global maritime law.

Global Sanctions Evasion Enters a New Era

The Ocean Glory case reveals a structural evolution in sanctions evasion, transforming from isolated smuggling to a highly coordinated financial and logistical operation. Iran’s role as both exporter of oil and exporter of tactics has reshaped how sanctioned economies interact with global trade routes.

The network’s ability to funnel billions in crude through a patchwork of legal entities, outdated registries, and abandoned offices underscores the challenges facing international regulators. Without systemic reforms in maritime law enforcement and financial transparency, the rise of shadow fleets may signal not a loophole in sanctions policy but the emergence of a parallel trading system built to defy it.

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