Malaysia rejects claims it enables Iranian oil transfers near Johor

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Malaysia’s Maritime Enforcement Agency said Iranian-linked tankers have been using “jurisdictional gaps” to carry out ship-to-ship transfers of sanctioned oil near Malaysia’s southern Johor state, rejecting allegations that authorities have ignored a long-running trade. The agency’s comments came as U.S.-based monitors and industry observers point to an area off Johor used for transfers involving Iran’s so-called “shadow fleet,” which they say helps sanctioned shipments reach buyers while masking the origin of the crude.

The contested activity centers on the Eastern Outer Port Limits, or EOPL, in the South China Sea, about 70 kilometers (45 miles) off Johor and along one of the world’s busiest shipping routes. The area lies roughly halfway between Iran and China, which buys about 90% of Iranian oil, according to the report. U.S. officials have previously said Iranian oil exports depend heavily on service providers and ship-to-ship transfers operating near Malaysian waters.

UANI said it has tracked 42 ship-to-ship transfers of Iranian oil conducted in the EOPL area since Feb. 28, when the U.S. and Israel attacked Iran and the fighting widened in the Middle East. In remarks to the Associated Press, senior UANI adviser Charlie Brown warned that Malaysia’s conduct is enabling the model.

“Because of Malaysia’s inaction, it is facilitating this business model by Iran and China and dark fleet actors,” Brown told the AP, adding that he believed Malaysia was becoming “a facilitator rather than merely a transit point” for illicit activity. UANI said it used satellite imagery to observe the transfers.

Malaysian Maritime Enforcement Agency Director-General Mohamad Rosli Abdullah said the transfers are often conducted outside Malaysia’s territorial waters and in remote areas beyond radar coverage, especially near maritime boundaries or international shipping routes. He told the AP that the choice of locations is intended to “exploit jurisdictional gaps and limit direct enforcement action by local authorities.”

Abdullah also pushed back on UANI’s allegations, saying the UANI allegations “do not align with the actual situation on the ground and do not reflect the operational realities of maritime enforcement conducted by the MMEA.” He said a lack of real-time intelligence-sharing among domestic and international agencies also hampers enforcement.

The dispute reflects a broader pattern in sanctions enforcement at sea, where clandestine high-seas transfers from Iranian-linked tankers have persisted for years. Malaysia’s enforcement agency said the transfers may not be illegal but also said Malaysia discourages unsanctioned transfers outside designated areas, citing environmental and safety concerns such as the risk of spills, the use of aging vessels, and the difficulty of containing mistakes far from ports.

The report said that despite a U.S. blockade of Iranian ports that began in mid-April, UANI said it has tracked Iranian-linked tankers still operating, though it is not clear how many have continued after the blockade began. It also said that, as of Tuesday, two dozen Iranian-linked tankers tracked by UANI were anchored or loitering near the EOPL area, though it was not clear how many had sailed before the blockade took effect.

Malaysia’s position also extended to questions of enforcement authority and environmental regulation. UANI said Malaysia could enforce environmental rules tied to advance notification of ship-to-ship transfers, prevent Malaysian companies from providing support to ships involved, and require ships to carry adequate insurance against accidents and oil spills. The MMEA director-general said enforcement is conducted strictly under Malaysian law and relevant international conventions, adding that authorities have “never compromised nor provided any special treatment or privileges to any country.”

Indonesia, which has jurisdiction over the nearby Riau Archipelago that borders the EOPL area, said it is reviewing the situation. Foreign Ministry spokesperson Yvonne Mewengkang said Indonesia does not permit its territory or maritime zones to be used for unlawful activities, while also saying Indonesia upholds legitimate navigational rights under international law, including innocent passage and transit passage.

Malaysia’s agency said it has taken enforcement actions earlier this year in related circumstances, including seizing two vessels—one stateless and another flagged to Cameroon—over a transfer of 2 million barrels of crude oil in Malaysian territorial waters. The report said the vessels were later released on bond for conducting unauthorized oil transfers, and UANI’s Brown said one of the vessels was spotted earlier this month conducting a ship-to-ship transfer of suspected Iranian oil off Johor.

The MMEA director-general said Malaysia would “continue to strengthen monitoring and enhance strategic cooperation with relevant agencies” to ensure safety and sovereignty in its maritime domain. The conflicting accounts from Malaysia, UANI, and Indonesia underscore how enforcement at sea can depend on jurisdictional boundaries and on whether agencies share intelligence fast enough to identify transfers in time to intervene.