China is quietly fueling its economic engine with sanctioned oil from Russia, and Iran has become the critical middleman. By using elaborate networks of shadow tankers, forged documents, and ship-to-ship transfers, Beijing has managed to keep its energy supplies flowing while sidestepping U.S. sanctions.
Iran as the Transshipment Hub
For years, Iran has perfected the art of moving oil in defiance of Western restrictions. Companies like Sahara Thunder acted as front operations, disguising cargoes with falsified certificates of origin, repainting ships with new identities, and manipulating tracking data to mask their routes. Tankers like the Remy, which often sailed under the fake name Deep Ocean, transferred oil in murky waters such as the Strait of Malacca, far from prying eyes. Over sixty transfers were recorded, ensuring Iranian, Russian, and even Venezuelan crude could find its way east without being tied directly to Tehran.
The Naval Mortgage Scheme
One of the more sophisticated tools was the use of naval mortgages, a system typically designed to back shipping loans. Instead, Iranian operators arranged mortgages through offshore brokers like Ocean Glory Giant, registering dozens of tankers under shell companies. Many of these shell entities were tied to Chinese nationals, some of whom were later sanctioned by the United States. By 2023, the network controlled over thirty ships worth nearly a billion dollars, carrying an estimated 130 million barrels of sanctioned oil.
Why China Benefits
China’s economy is heavily dependent on energy, and Russian and Iranian oil has been available at discounted rates since sanctions reduced their global buyers. According to U.S. estimates, more than 80 percent of Iran’s oil exports end up in China, amounting to over a million barrels a day. In April 2025, China imported over 1.3 million barrels a day of Russian crude, a 20 percent increase from the month before. These cut-rate supplies are too valuable for Beijing to give up, especially as it tries to maintain growth and stabilize its domestic markets.
The elaborate mechanics of this trade allow both Iran and Russia to sustain vital revenue streams while helping China dodge U.S. pressure. By disguising the oil’s origin, using falsified bills of lading, and conducting transfers in international waters, the shipments avoid detection by regulators and insurers tied to Western oversight. As Claire Jungman of Vortexa noted, these “dark fleets” have become a model for keeping shadow oil volumes flowing eastward.
China Pushes Back
Washington’s demand that Beijing halt its purchases has been met with defiance. China’s foreign ministry insists its cooperation with Iran and Russia is “legal, justified, and reasonable.” Officials argue that energy supply is a matter of national security, not foreign negotiation. As one Asia Society Policy Institute fellow explained, “Beijing simply can’t afford to walk away from the oil from Russia and Iran. It’s too important a strategic energy supply, and Beijing is buying it at fire-sale prices.”
For the U.S., restricting these oil flows is about weakening Moscow’s ability to wage war in Ukraine and cutting Tehran’s support for militant groups across the Middle East. But for China, it is about energy security and strategic independence. By keeping the oil spigots open through Iran’s transshipment networks, Beijing is not only saving billions but also signaling that it will not bow to American pressure.