Iran has been bypassing US sanctions and the naval blockade by using ship-to-ship transfers to move oil to China, reports the Jerusalem Post.

Citing the Wall Street Journal, the report said tankers offload crude onto other vessels at sea before shipments head to China. Many of the receiving ships belong to Iran's "shadow fleet" of ageing tankers that obscure ownership, switch flags to states with weak oversight, and often disable tracking devices or paint over identification numbers.

Despite China recording no official imports of Iranian oil since 2022, Iran earned about US$31 billion in revenue from sales to China, according to the US-China Economic and Security Review Commission. This accounts for 90 per cent of Iran's foreign oil sales and about 45 per cent of its government budget.

China avoids direct sanctions on its refineries, ports and banks by purchasing Iranian oil at discounted prices. The shadow fleet is sustained by Chinese registration of tanker owners and crews supplied from China.

Chinese ship management firms openly advertise jobs on shadow fleet vessels, offering extra pay to crews for the risks of operating older ships prone to accidents and oil spills.