Bloomberg News

US President-elect Donald Trump wants to ratchet up sanctions pressure on Iran in order to curb oil revenue and thus the regime’s ability to fund proxy militias.

A flotilla of aging oil tankers gathered east of Malaysia — transferring billions of dollars of sanctioned crude to China — is a timely reminder that this is easier said than done.

Bloomberg News analyzed almost five years of satellite images and ship-tracking data, interviewed maritime security and oil experts, and then sailed out to the South China Sea to draw up a picture of what is, today, the largest dark fleet cluster anywhere in the world.

In the first nine months of this year, our investigation shows at least 350 million barrels moved through this region on the way to China.

Most of that oil was Iranian.

This trade is not illegal, given countries in the area don’t necessarily recognize US sanctions — but it unquestionably threatens coastal economies and livelihoods. Accidents have already happened.

Legitimate shipowners, meanwhile, fret over the risks to their fleet from vast numbers of uninsured ships transiting through busy waterways like this one, just past the Malacca Strait, with their transponders not infrequently switched off.

Why are these vessels ferrying sanctioned oil in plain sight, despite the risks?

In part, it’s simple economics. Iran needs buyers, and China’s private refiners need cheap crude. It’s also geography: This patch of water is conveniently placed, calm all year round and just out of territorial waters, making law enforcement difficult.

And then there’s geopolitics. China doesn’t recognize US sanctions on Iran. Southeast Asian states pride themselves on being able to balance Chinese and Western interests and demands.

But the vital point is that this trade is extraordinarily resilient, relying not on easy-to-sanction banks and large traders but on middlemen, rapidly evaporating shell companies and, ultimately, on China’s plethora of small, private refiners.

The incoming administration in Washington can dial up persuasive conversations with coastal states and with China. It can crack down more frequently, too.

But the economics, geography and geopolitics that keep this armada afloat aren’t changing anytime soon.

–Weilun Soon, Bloomberg News