FT: Russia sells oil to China through shadow infrastructure that Iran created back in 2019

In 2019, Iran created a shadow infrastructure to sell oil to China through Swiss lawyers and Panamanian offshore companies. Russia and Venezuela later joined in.

This is stated in an investigation by the Financial Times and the non-profit research group C4ADS.

In 2018, the US President Donald Trump withdrew from the nuclear deal, which briefly eased sanctions in exchange for Iran curbing its nuclear ambitions. The following year, he revoked temporary waivers that had allowed eight countries, including China, to continue buying Iranian oil without fear of US sanctions.

In the spring of 2019, Iran began creating offshore companies for the Panama-registered commodity broker Ocean Glory Giant.

Ocean Glory wanted to take out marine mortgages — in this case, a fixed lien secured by the vessel, rather than a conventional loan to purchase it — on individual oil tankers to serve as collateral for deals with Chinese buyers.

If Ocean Glory failed to receive payment for the oil it delivered, it could foreclose on the mortgage and claim ownership of the counterparty’s vessel. The origin of the oil was listed as Iraq and Malaysia.

In total, Swiss lawyers signed mortgages on more than 30 tankers worth about $1 billion. The investigation alleges that these vessels were used almost exclusively to transport billions of dollars worth of oil from Iran, Venezuela, and later Russia.

It is not clear who exactly bought the oil. Each tanker was registered to a separate holding company in Hong Kong, the Marshall Islands or the Cayman Islands, run by a different Chinese shell company with little public profile.

However, phone numbers and other details in the mortgage documents suggest that some of the companies had ties to Chinese individuals and entities that the US imposed sanctions on during Donald Trump’s first term.

Eight of the companies used the same Chinese phone number, which records show was registered to Li. These connections indicate that many of the vessels are part of what C4ADS described as “one of the largest collections of shadow fleet vessels in the world”, likely controlled by a single ultimate beneficial owner in China.

Of the 34 maritime mortgages agreed between 2019 and 2023, at least 19 were signed in September or November 2022. That’s when the shadow fleet began transporting Russian oil in response to Western sanctions against Russia.

According to C4ADS analysis, while the mortgages were in place, various ships transported at least 130 million barrels of oil worth about $9.6 billion. Almost half of it came from Iran, about a quarter from Russia, and just under 20% from Venezuela. Virtually all of this oil — 93% — ended up in China.

Restrictions for Russian oil

In early December 2022, the G7 members, as well as Australia and the European Union, capped the price of Russian oil at $60 per barrel. From February 5, 2023, these countries introduced a new price ceiling for Russian oil products: $100 for diesel fuel, $45 for various lubricants. To circumvent oil sanctions, Russia began forming a shadow fleet.

In July 2024, British Prime Minister Keir Starmer said that Russiaʼs shadow fleet consists of almost 600 vessels and represents approximately 10% of the worldʼs "wet cargo" fleet.

Some of the ships of the shadow fleet serve as Russian listening stations, while others transport weapons to Russia. The shadow fleet transports approximately 1.7 million barrels of oil per day, generating huge profits for the Kremlin.

In 2023, Russia earned $188 billion from oil exports. In December, Ukrainian intelligence compiled a dossier on 238 ships and 31 captains belonging to the shadow fleet, which Russia and Iran use to circumvent oil sanctions and deliver sanctioned oil.

On January 10, the United States imposed a large-scale package of sanctions against Russian oil companies. 184 Russian tankers, including those from the Russian shadow fleet, were subject to restrictions.

On July 18, 2025, the EU imposed its 18th package of sanctions, which, among other things, provided for a reduction in the price ceiling for Russian oil to $47.6 per barrel. The price reduction was later joined by Britain and later by Canada.

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