[The Two Faces of the Shadow Fleet]①"Propping Up Oil Supply Chains Under the Surface...But Escalating Safety Costs"

From Dozens in 2019 to as Many as 2,000 Vessels
U.S. Sanctions Increasingly Evaded ... "International Cooperation Essential"

Editor's Note
After the Strait of Hormuz—a waterway accounting for approximately 34% of global seaborne crude oil trade—was blocked by Iran, oil tanker traffic has plummeted to just 10% of normal levels. This is a result of the Iran War, which U.S. President Donald Trump had confidently claimed would end in no more than six weeks, now entering its sixth month as of September 7, 2026. Crude prices, once feared to surge to 200 dollars per barrel in the early days of the war, have instead fluctuated in the range of 70 to 120 dollars since the outbreak. One key factor limiting oil price increases has been the activities of the so-called "Shadow Fleet"—a network of oil smuggling vessels with ambiguous nationality, also referred to as "pirates." Experts note that while the Shadow Fleet may temporarily act as a buffer preventing sharp spikes in oil prices, in the long term, it could have negative consequences. The existence of such fleets undermines the effectiveness of U.S. sanctions against Iran and provides financing to the Iranian regime, fueling a protracted conflict. This is precisely why the United States, when announcing sweeping economic sanctions against Iran last month, specifically named the Shadow Fleet as a target. The Asia Business Daily has examined the reality of the Shadow Fleet and measures to strengthen the effectiveness of U.S. sanctions.

"We have decided to impose sanctions targeting companies and their affiliated vessels that operate ships transporting Iranian crude oil and petroleum products illegally, including Shipra Shipping Company, Vienna Shipping Corporation, Likeja Group, Lilimon Navigation, and Estanica Trading."

The U.S. Department of the Treasury made this announcement on August 24, while launching a powerful new round of economic sanctions against Iran. The move was a declaration of a large-scale clampdown on the so-called "pirate" Shadow Fleet.

The Shadow Fleet Rises as the Centerpiece of U.S. Sanctions Against Iran ... May Expand to as Many as 2,000 Vessels

Daniel Roth, Director of the United Against Nuclear Iran (UANI) Institute

Daniel Roth, Director of the United Against Nuclear Iran (UANI) Institute—a U.S.-based organization monitoring sanctions against Iran—explained in an interview with The Asia Business Daily, "The Shadow Fleet was first detected in 2019 as dozens of ships operating around the Middle East, and it is now believed that several hundred such vessels are active," adding, "These fleets frequently use forged documents to falsify cargo manifests or sail with their automatic identification systems (AIS) turned off to avoid tracking, earning them nicknames like the 'Dark Fleet' or 'Ghost Armada.'"

The Shadow Fleet is thought to have been organized by Iran for the first time around 2019. UANI reports that a complex network has been established, stretching from the Middle East to East Asian waters, to facilitate the smuggling of Iranian crude oil into China—the fleet's main destination. Roth stated, "The Shadow Fleet network is linked from the Persian Gulf and the United Arab Emirates (UAE) coast, through the Indian Ocean and Malacca Strait, all the way to the South China Sea," and added, "Particularly, the UAE, the Malacca Strait, and Malaysia are critical hubs for this network due to their high maritime traffic, strategic locations, and abundance of offshore anchorages suitable for clandestine ship-to-ship transfers."

It is now estimated that the Shadow Fleet numbers up to 2,000 vessels. According to the Financial Times (FT), citing marine data firm TankerTrackers, "There are already 1,482 ships in the Shadow Fleet under Western sanctions, and if ships operating under false national flags are included, the global Shadow Fleet likely exceeds 2,000 vessels."

"The Shadow Fleet Caps Oil Prices … But Persistent Activity Could Destabilize the Market"

Some argue that activities by the Shadow Fleet have helped maintain oil supply chains and prevent oil prices from rising above 200 dollars per barrel. Bloomberg reported, "Alternative oil supply networks, including the Shadow Fleet, have continued to supply Iranian and other Middle Eastern oil to the market, helping to mitigate some of the supply shock," and noted that "the explosive price surges of 150-200 dollars per barrel, once discussed in the early stages of the Iran war, have not come to pass."

Indeed, international crude prices continue to fluctuate between 70 and 120 dollars per barrel. According to CNBC, right after Russia's invasion of Ukraine in February 2022, Brent crude—a global pricing benchmark—spiked as high as 139 dollars per barrel during intraday trading. In contrast, during the Iran War since late February this year, Brent’s highest intraday price was 126.41 dollars, with a closing high of 118.35 dollars.

However, experts warn that if the Shadow Fleet remains active over a long period, market transparency and trust will eventually be weakened and operational risks will rise, increasing the volatility of crude prices. Roth commented, "A so-called 'Iran terror premium' is already factored into global oil prices due to the risk of attacks, and the Shadow Fleet presently serves to temporarily ease upward price pressure by keeping oil on the market," but also emphasized, "This comes at the cost of weakening the effectiveness of U.S. and Western sanctions against Iran and providing the hostile Iranian regime with cash flows, ultimately eroding market trust and significantly increasing the risks to the safe transport of Middle Eastern oil."

"Shadow Fleet’s Sanctions-Evasion Tactics Become More Sophisticated" ... Concerns Over the Limits of Sanctions

Associated Press Yonhap News Agency

The Shadow Fleet is increasingly operating through more sophisticated methods to evade U.S. sanctions. Roth stated, "In the past, it was relatively straightforward to sanction and identify the Shadow Fleet, as it was run by Iranian state shipping companies such as the National Iranian Tanker Company (NITC) and the Islamic Republic of Iran Shipping Lines (IRISL). However, recently, partnerships with Russian and Chinese shipping companies have resulted in an extremely complex network," further explaining, "These operations now often involve Chinese financial institutions, third-country ship registries (flag registry), classification societies, and other typically reputable shipping service providers, who are connected through shell companies to conceal transactions—making sanctions enforcement far more difficult."

Even ships that have been sanctioned are employing various new evasion tactics, making tracking ever more challenging. According to Roth, Shadow Fleet vessels utilize a range of techniques: frequent "flag-hopping" (changing registered nationality during operations), registration under flags of convenience (declaring third-country flags), manipulation or deactivation of AIS signals, alteration of ships’ appearances while at sea, changes to ship names and crew identities, and ship-to-ship transfers (STS), among others.

As a result, efforts led solely by the United States are proving insufficient to block the Shadow Fleet. Roth stressed, "To fully sanction the Shadow Fleet, it is necessary to not only target Iranian-linked shipping firms but also greatly expand secondary boycotts on Chinese banks providing the fleet with insurance or financial services," and argued, "The United States, together with Western and East Asian allies, must increase coordination through satellite and maritime surveillance and enhanced intelligence sharing in order to maximize the effectiveness of these sanctions."

This content was produced with the assistance of AI translation services.