Iran’s unsold oil stocks surge

Storing millions of barrels of oil at sea is costly. According to industry estimates, Iran spends hundreds of millions of dollars annually just to maintain these floating reserves.

By Dalga Khatinoglu, Middle East Forum

Iran’s oil minister has denied reports that Iran now has tens of millions of barrels of unsold crude floating at sea, insisting that the country has no oil it is unable to sell.

Speaking on August 1, 2025, in response to media reports suggesting that Iran holds as much as 40 million barrels of unsold crude offshore, Oil Minister Mohsen Paknejad said, “There is simply no oil that we are unable to sell.”

However, satellite data and tanker-tracking firms tell a different story. According to multiple energy analytics companies, the volume of Iranian oil stored at sea has surged by about 30 million barrels since the beginning of 2025.

This is largely due to a growing gap between the volume of oil loaded from Iranian terminals and what is being delivered to end customers—mainly in China.

To obscure the origin of its crude exports and bypass U.S. sanctions, Iran frequently uses ship-to-ship transfers in international waters—especially near Malaysia and Singapore—in a complex smuggling operation.

Tankers, many of them part of what analysts call the “ghost fleet,” transfer oil to non-sanctioned vessels that then sail to Chinese ports, often with identification systems turned off and fake ownership documents.

Data from Kpler, a global commodities analytics firm, show that Iran’s floating oil reserves have increased from five million barrels in early January to over 33 million barrels as of late July.

Other sources, such as Vortexa and Commodities Analytical Solutions, put the figure even higher—estimating Iran’s floating oil stockpile at 63 million barrels, up by 23 million barrels since the start of the year.

All tracking data point to a clear trend: Over the past seven months, Iran has accumulated an estimated 23 million to 28 million barrels of unsold oil at sea, most of it anchored near Malaysia.

Kpler estimates that in 2024, nearly half of Iran’s crude exports to China were disguised as Malaysian-origin oil—a claim corroborated by Chinese customs data.

According to official figures, China reported zero oil imports from Iran in 2024, yet it imported over 1.4 million barrels per day from Malaysia—a figure that is not only triple Malaysia’s total production capacity but also eight times higher than the number prior to the U.S. imposing sanctions on Iran in 2018.

Although Malaysia earlier pledged to limit ship-to-ship operations in its waters under pressure from Washington, the shadow trade continues.

Kpler data also show that since January 2025, the average daily difference between oil loaded at Iranian ports and volumes offloaded in China exceeds 200,000 barrels per day—suggesting large quantities of oil remain unsold and stranded on tankers.

Under normal circumstances, a shipment from Iran to China would take about three weeks. But because of the need for concealment, Iranian oil may spend months in transit, being transferred multiple times in various waters.

Despite Iran owning the world’s sixth-largest oil tanker fleet, data from United Against Nuclear Iran show that almost none of its oil is transported by Iranian-flagged tankers. The exports rely on the expensive and legally risky “ghost fleet.”

The cost of chartering these anonymous tankers is higher than standard market rates. Additionally, Iran must pay middlemen—shell companies and brokers based in the United Arab Emirates, Iraq, Oman, Malaysia, and Singapore—as well as Chinese intermediaries who help falsify documentation and rebrand Iranian crude.

Storing millions of barrels of oil at sea is costly. According to industry estimates, Iran spends hundreds of millions of dollars annually just to maintain these floating reserves.

Chinese refiners also benefit from steep discounts. In June 2025, they reportedly received a $4 per barrel discount on Iranian oil—double the May discount. Figures for July and August are not yet available.

Taken together, these operational challenges and discounts mean Iran is losing an estimated 20-25 percent of its oil export value. In real terms, that translates into an annual loss of $8-10 billion—a steep price for navigating around sanctions.

This is a loss the government can hardly afford, but it has no alternatives except reaching a deal with the United States to suspend economic sanctions.

The state depends on oil income to balance its budget, and current estimated revenues fall well short of covering needs or necessary infrastructure maintenance to preserve its oil industry.