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.
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."
