NewKerala.com

US Navy’s Iran Blockade Hits China’s Discounted Oil Deals, Report Reveals

The US Navy’s blockade of Iran has intensified economic pressure on Tehran, even amid a ceasefire, impacting China’s discounted oil purchases. These deals relied on a covert system of ghost tankers, shadow banking, and shell companies to bypass Western sanctions. The US is now targeting the entire network, which previously survived limited actions. This disruption also affects China’s strategic planning, as Beijing used Iran as a testing ground for evading sanctions.

Key Points: US Navy Iran Blockade Hits China Cheap Oil Deals

  • US Navy blockade builds economic pressure on Iran despite ceasefire
  • China’s cheap oil deals used covert system of ghost tankers and shadow banking
  • US aims to dismantle entire network, not just individual aspects
  • China’s teapot refineries processed most Iranian oil, funding IRGC proxies
  • US sanctions 35 entities and 19 shadow fleet vessels in latest action
3 min read

US Navy's blockade of Iran hits China's cheap oil deals: Report

US Navy’s blockade of Iran disrupts China’s discounted oil deals via ghost tankers and shadow banking, dismantling the covert network, says a new report.

"The arrangement served Beijing on both ends, with Chinese refiners purchasing Iranian crude at steep discounts unavailable on open markets, while every successful evasion transaction simultaneously stress-tested the financial infrastructure Xi intended to activate over Taiwan. - Sky News Australia"

New Delhi, May 1

The US Navy's blockade of Iran has built economic pressure on Tehran that continues even though the ceasefire has led to a temporary pause in fighting, according to a new report.

The blockade has also hit China's purchases of Iran's oil, at discounted prices, deals for which were being carried out through a covert financial system and a fleet of ghost tankers.

According to an article in Sky News Australia, Iran's Islamic Revolutionary Guard Corps (IRGC) has sustained itself through shell companies, rotating ship identities, and shadow banking corridors that kept oil revenue flowing outside the formal financial system.

The article highlights that earlier, the US kept targeting individual aspects of this covert system put in place by China and Iran to circumvent western sanctions. However, this time around, the US is aiming to dismantle the entire network that in the past has managed to survive the limited action.

It points out that earlier, this clandestine ecosystem survived as China built the infrastructure to sustain it. This included a shadow banking network which concealed the origin of Iranian crude oil, rotating ship identities, and layering payments through third-country intermediaries.

China's "teapot refinery" sector, comprising small coastal refineries, processed most of Iran's oil exports, while carrying out these deals through the US financial system in dollars and providing the IRGC the hard currency which was required to finance missiles, drones, and weapons transfers to regional proxies such as Hezbollah, Hamas and the Houthi rebels.

The article also states that China was also using Iran as "a rehearsal space," so that it could use these evasion methods on a much wider scale for itself if required to evade US sanctions.

The IRGC operated a rotating fleet of tankers under falsified identities to conceal Iranian crude shipments to Chinese buyers, while Hengli Petrochemical, China's second-largest independent refinery, received more than five million barrels of IRGC-affiliated crude through that same network, the article points out.

"The arrangement served Beijing on both ends, with Chinese refiners purchasing Iranian crude at steep discounts unavailable on open markets, while every successful evasion transaction simultaneously stress-tested the financial infrastructure Xi intended to activate over Taiwan," the article observes.

However, there has been a big setback to this entire network as in the latest action, the US has sanctioned 35 entities and individuals running Iran's shadow banking system, hitting 19 shadow fleet vessels simultaneously, and putting every company paying IRGC tolls for Strait of Hormuz passage on notice, the article added.

- IANS

Share this article:

Reader Comments

P
Priya S
Honestly, this US blockade is affecting everyone, not just China. India imports a lot of oil from the Middle East, and any disruption in the Strait of Hormuz will hit our economy hard. The teapot refineries in China are smart to take advantage of discounted Iranian oil, but the US is getting serious now. 🛢️
M
Michael C
As an American living in India, I see both sides. The US has legitimate security concerns about IRGC funding proxies like Hamas, but this aggressive blockade hurts neutral countries too. India should've been more proactive in diversifying its energy sources years ago. Now we're all paying the price.
V
Vikram M
The way China uses shadow banking and ghost tankers is impressive but also dangerous. If they can do this for Iran, imagine what they'll do if Taiwan situation escalates. India needs to strengthen its own naval presence in the Indian Ocean to protect our energy routes. Self-reliance is key! 💪
R
Rohit P
Great reporting, but I wish Indian media would cover this more. The US is basically crippling Iran's economy while China profits. Meanwhile, India is stuck paying full price for oil. We should consider buying Russian oil at discounts too, like China buys from Iran. Why should we be the only ones following rules? 🤔
K
Kavya N
Interesting how the article mentions Hengli Petrochemical. Chinese companies are clearly playing both sides - buying cheap Iranian oil while doing business with US dollar system. But what happens when the US cuts off their access to dollars? Indian companies should take notes on how NOT to get caught in sanctions evasion.

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

Leave a Comment

Minimum 50 characters 0/50