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Ships in the night: Iran and Russia expand use of shadow fleets to avoid sanctions
19/11/2025
8 min read
Feature
Facing major sanctions from Europe, the US and elsewhere, Russia and Iran are increasingly resorting to the use of smuggling networks via shadow fleets and small ‘teapot’ refineries to export their oil. As a result, a considerable proportion of the world’s oil trades are now being handled outside formal recognised logistics networks, write Paul Cochrane and Dylan Carter.
Dr Justin Dargin, Senior Visiting Fellow at the Middle East Council on Global Affairs in Doha, Qatar, speaking to New Energy World, says: ‘Technically, Iran isn’t permitted to sell oil on the international market, yet it has continued to do so, exporting around 1.5–1.8mn b/d since 2023. Following the Israel–Iran war [in June 2025], exports even climbed to nearly 2.2mn b/d. That demonstrated Iran’s capacity to absorb a kinetic shock and revealed the oil sector’s resilience, particularly since Israel avoided striking the country’s main export terminals.’
An estimated 85–90% of Iran’s oil exports go to China, while exports to Syria, the United Arab Emirates (UAE), Oman and Venezuela were estimated in 2023 to be between 148,000–360,000 b/d, according to a 2024 US Energy Information Administration (EIA) report. The analysis noted that while most export destinations for Iranian crude since 2020 are listed as China, many are ‘listed as unknown’ but are ‘assumed’ to be to China as well as Malaysia, Singapore and Vietnam.
Shadow fleets, also known as ‘dark fleets’, use various methods to obscure their movements and identities, such as turning off their Automatic Identification System (AIS), faking their name or flag, and conducting ship-to-ship transfers at sea instead of in port. Some shadow fleet vessels deliver Iranian crude to ‘teapot’ refineries, small, independent oil refineries in China, primarily located in Shandong province. They are named for their compact, simple design and operate outside of China’s major state-owned oil companies.