Malaysia’s maritime authorities are overstretched and underfunded to curb the US-sanctioned Iranian oil trade, observers say.

May 9, 2024 Vaseline stjohnson 0

“These are ship-to-ship transfers, especially at night, that we see from time to time. They are actually designed to obfuscate the origin of the commodity, in this case, Iranian oil,” Nelson said.

A standby vessel near the Velesto Naga 7 offshore jackup drilling platform and oil production platform in Malaysian waters. The name change from Iranian to Malaysian oil places Malaysia as the fourth largest oil exporter to China. Photo: Shutterstock
In trade, Iranian oil is transferred by a “dark fleet” of old tankers and falsely rebranded as “Malaysia Blend”, before being sold at deep discounts to small Chinese refiners. It’s so big that, on paper, it would make Malaysia the world’s fourth-largest oil exporter. Porcelainanalysts say.

Nelson and U.S. Treasury General Counsel Neil MacBride are in Malaysia and Singapore on a four-day trip to discuss Iranian oil issues and ways to prevent Malaysia from becoming a jurisdiction where the Palestinian militant group Hamas can collect funds and move money.

Analysts say the trade may be happening despite Washington’s protests, as Malaysia’s maritime assets are notoriously underfunded and unable to fully patrol the waters, including the country’s exclusive economic zone, which spans some 574,000 square kilometers.

“(The Malaysian Maritime Enforcement Agency), despite being Malaysia’s frontline maritime law enforcement agency, has long suffered from a lack of resources and assets to carry out its mandate,” Thomas said. Daniel from the Malaysian Institute of Strategic and International Studies..

The construction of three new offshore patrol vessels for the agency has been hampered by cost issues, leading to only one having been delivered, while two more need a cash injection and are due for delivery in 2026.

The United States, under its Foreign Assistance Act of 1961, is transferring a U.S. Coast Guard cutter to Malaysia later this year.

Shipping containers at Tanjung Pelepas port in Iskandar Puteri, Johor. Photo: Bloomberg

Malaysian Communications Minister Fahmi Fadzil said the country was prepared to engage with U.S. counterparts to better understand concerns, while emphasizing that it would comply with U.N. sanctions but would not compromise on Washington’s embargoes.

“When it comes to unilaterally applied sanctions, I think we have to evaluate this situation,” Fahmi told reporters in Kuala Lumpur on Wednesday.

Carried out by a fleet of legacy tankers, ship-to-ship transfers are daily movements of crude oil, petroleum products, bulk liquid chemicals and liquefied gas between tankers while at sea, without the vessels having have to stop at a port or other facility. .

While nations do not have full sovereignty over their exclusive economic zones (and other countries are guaranteed freedom of navigation in such areas), an International Maritime Organization convention requires that oil transfers in exclusive economic waters be marked with a pavilion before they take place.

US based Iran The watchdog group United Against Nuclear Iran, which has been tracking oil transshipments from Tehran, alleges that China has purchased more than $90 billion in Iranian oil since the US president took office. Joe Biden in January 2021, despite the sanctions imposed on Tehran in 2019.

Hidden under names such as Omani Crude, Iraqi Crude, Russian Urals, Bitumen Blend, Nemina or Malaysian Blend, China’s small privately owned oil refineries, known as “teapots”, have bought Iranian oil at a steep discount of $4 the barrel. below the reference price.

Oil is currently trading at $83.70 per barrel based on the Brent crude benchmark.

The name change from Iranian to Malaysian oil places Malaysia as the fourth largest oil exporter to China, behind Saudi Arabia, Russia and Iraqand experts point out that the number of imports exceeds Malaysia’s total crude oil production.
Further complicating the situation are the important trade routes of the Strait of Malacca and the south china sea straddling Malaysia, along with overlapping claims on the latter with intrusions by China’s coast guard into Malaysia’s exclusive economic zone.

China was caught by surprise in June last year when a Chinese barge was found illegally recovering steel (and unexploded ordnance) from two British World War II warships that sank off the coast of the Malay Peninsula in 1941, a act condemned as looting of historical assets. place.