Bogus barrels: how Iran exploits Iraq’s name to move its oil
Dalga Khatinoglu
Oil, gas and Iran economic analyst
Iran is passing off its crude oil as Iraqi exports to evade US sanctions, according to new evidence that contradicts Baghdad’s denials.
Oil, gas and Iran economic analyst
Iran is passing off its crude oil as Iraqi exports to evade US sanctions, according to new evidence that contradicts Baghdad’s denials.
Iraq’s national oil marketer, SOMO, rejected any involvement when the United States sanctioned an Iraqi businessman in July for allegedly profiting from smuggling Iranian oil disguised as Iraqi crude.
But customs data from China appears to point to a different reality.
For two consecutive years, Chinese records show imports of “Iraqi” oil exceeding Iraq’s declared shipments by around 100,000 barrels per day—worth more than $2.5 billion annually.
The gap has grown since 2021, suggesting a persistent pattern of disguised flows.
Spoofing, going dark
Tanker-tracking companies confirm that Iran uses a mix of tactics to conceal the true origin of its shipments. These include forged bills of lading and manipulation of AIS (automatic identification system) data, which allow vessels to broadcast false positions.
Some tankers simulate loading near Oman’s Sohar port, though the crude is actually taken on in Iranian waters. Similar tricks have enabled Iranian oil to reach China under the cover of Iraqi or Omani documentation.
“Iranian oil does reach China as ‘Iraqi’ oil in large volumes given the bogus SOMO documentation, but we’ve also seen the same with ‘Omani’ oil because of the spoofing off Sohar,” said TankerTrackers, a shipping intelligence company.
Kpler, another data firm, said very large crude carriers often “go dark” and later reappear, but rarely spoof Iraqi terminals directly.
For fuel oil, however, some spoofing to Iraq’s Al Basrah terminal has been observed—though only in small amounts.
Kpler estimates Iran exported about 245,000 barrels per day of fuel oil in 2024, worth nearly $6 billion. Almost half went to the United Arab Emirates, 22% to China, 10% to Malaysia and the rest to other East Asian states.
“Iran uses a number of tactics to evade sanctions, including forged bills of lading, which may lead many to believe they are transporting Iraqi oil when in fact it is Iranian,” Claire Jungman of Vortexa said.
Shifting political cost
These tactics keep Iran’s exports flowing, but they also export the political fallout.
By disguising shipments as Iraqi, Omani or Emirati, Tehran forces its neighbors to carry the political and reputational burden in Washington.
Iraq’s oil minister Hayyan Abdul-Ghani acknowledged earlier this year that Iranian tankers were using forged Iraqi documents and said the matter had been reported to the United States.
Meanwhile, nearly half of Iran’s exports to China are presented as Malaysian oil—an anomaly that has drawn US scrutiny of Kuala Lumpur.
In the first seven months of this year, Chinese customs data showed imports of 1.46 million barrels per day from Malaysia, even though Malaysia’s total production is only about one-third of that figure.
Enforcement challenge
The pattern highlights the difficulty the US and its allies face in enforcing sanctions.
Iran has developed a sophisticated playbook: falsifying documents, manipulating digital tracking systems and exploiting the names of neighboring states. Each maneuver allows Tehran to keep revenues flowing while leaving others to explain statistical discrepancies.
For Iraq, the reputational stakes are particularly high.
As Baghdad seeks deeper ties with Washington and international investors, being seen as a potential cover for Iranian smuggling undermines confidence in the transparency of its oil sector.
By exploiting its neighbors’ identities, Iran is eroding trust in the global energy system, where documentation and digital tracking are supposed to guarantee legitimacy.
Two rounds of talks between the IAEA and the foreign ministry had already taken place, with a third session planned, Mohammad Eslami, head of the Atomic Energy Organization of Iran, told reporters.
“The matter of IAEA supervision over the refueling of Bushehr was on the agenda. Two inspectors came, observed the process and left,” he said.
Inspectors entered the country with authorization from the Supreme National Security Council to oversee a fuel replacement process at Bushehr, he added.
The visit marked the first IAEA presence since Tehran suspended cooperation during the 12-day war with Israel, when US and Israeli strikes targeted Iranian nuclear facilities.
IAEA Director General Rafael Grossi said last week that while inspectors were allowed back into Bushehr, access to other key sites remained blocked. He also warned that the agency was still dissatisfied with the level of Iranian cooperation.
Some Iranian officials and media outlets had also threatened that as soon as Grossi entered Iranian territory, he should be arrested and put on trial. The Kayhan newspaper, overseen by the Supreme Leader Ali Khamenei, had called for Grossi to be tried and executed “for spying for Mossad.”
Dispute over snapback sanctions
Eslami dismissed the activation of the UN snapback mechanism by Britain, France and Germany as unsurprising. “Our enemies always find excuses to pressure the Iranian nation,” he said, accusing the IAEA leadership of acting under the influence of Western powers.
The European states triggered the mechanism on August 28, seeking the reimposition of all previous UN sanctions and demanding that Iran resume full cooperation with the IAEA within 30 days. Tehran has so far refused.
Officials have threatened that if pressure intensifies, Iran could withdraw from the Nuclear Non-Proliferation Treaty — a move that would deepen its isolation and risk losing support from Russia and China.
The IAEA has reported that Iran holds enriched uranium stocks far beyond the limits set in the 2015 nuclear deal, including more than 400 kilograms enriched to 60 percent.
The fate of this material remains unclear after the strikes on Fordow, Natanz and Isfahan during the June conflict. Experts warn it could be enough, if further refined, to build several nuclear weapons.
Addressing the gathering on Monday, Pezeshkian outlined a three-part proposal called the “Special Accounts and Settlements of the Shanghai Cooperation Organization.”
The plan proposes to expand the use of national currencies in trade, develop shared digital systems including central bank digital currencies, and create a multilateral swap fund to support members facing sanctions or liquidity crises.
“This initiative will enhance economic resilience and turn the SCO into a model of a fair multipolar financial order,” he said.
He also urged the formation of a committee of foreign ministers to manage crises and respond quickly to violations of sovereignty.
This was not the first time Pezeshkian stressed de-dollarization. At a BRICS meeting in Russia in 2024, he said the bloc was recognized for “challenging the dominance of the dollar” and promoting national currencies.
At that time, an image of a banknote bearing the BRICS emblem in the hands of Russian President Vladimir Putin at the organization’s summit in Tatarstan drew media attention and sparked discussion about the possibility of its members adopting a common currency.
In December 2024, before officially taking office as US President Donald Trump warned BRICS members that if they used any currency other than the US dollar, they would face a 100% tariff.
Absent from leaders’ photo
A video released Sunday showed Pezeshkian missing from the customary group photo.
Iranian media said he arrived late, while his deputy for communications said the official summit was to begin the following day and the photo was taken during an informal banquet. Unofficial Iranian accounts said his absence was due to alcohol being served at the reception, an issue sensitive for Iranian officials.
Tehran is seen as banking on bilateral meetings during the summit, particularly with Russian President Vladimir Putin and China’s Xi Jinping, as it seeks to manage fallout from its nuclear dispute with the West.
Founded in 2001 by China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan, the Shanghai Cooperation Organization (SCO) initially focused on regional security and counterterrorism.
Over time, China and Russia have framed it as a counterweight to US and NATO influence. The SCO now has 10 full members—including India, Pakistan, Iran (since 2023), and Belarus (since 2024)—and its agenda has expanded to economic, political, and military cooperation.
Aday after three European states triggered a UN mechanism that reimposes international sanctions on Iran, the move appeared to wrongfoot Tehran's establishment despite months of warnings.
Iran's new Security Chief, Ali Larijani, seemed to misread the immediacy of the threat in an interview days before the diplomatic setback.
In an interview with Supreme Leader Ali Khamenei's official website on August 22, Larijani insisted that China and Russia could shield Iran against the snapback threat.
"This issue is currently under review domestically, and as far as I know, some countries are making efforts to negotiate in order to prevent it from happening. Russia and China also hold a different position. They're acting as obstacles."
