Iran’s lawlessness is not limited to the Persian Gulf. Around the world, a complex system of sanctions evasion takes advantage of counterfeit flags, Cuban energy desperation, Venezuelan lawlessness, Panamanian front companies, and Brazilian ports to obfuscate the Iranian origin of oil and its purchasers.
The Khamenei and Maduro regimes long had extensive trade ties. In January 2025, 99 ghost vessels dealt in smuggled Iranian and Venezuelan oil, sometimes engaging in ship-to-ship transfers. For example, in 2023, Iran sold over 12 million barrels of crude and condensate to Venezuela, while Caracas sent an equal amount of fuel oil to Tehran. Making three to five different ship-to-ship transfers helped hide the origin of their oil. Counterfeit certificates and falsified automatic identification system signals complete identification further. To track only the last vessel carrying the cargo is insufficient, since the transportation chain involves multiple ships.
To track only the last vessel carrying the cargo is insufficient, since the transportation chain involves multiple ships.
The tanker Al Jafzia began broadcasting a fake Nicaraguan flag on February 11, 2026, nearly a week after Indian authorities halted its operations for illicit oil trafficking. The vessel’s papers reflected registration in the port of Corinto. The International Maritime Organization’s database does not include the Nicaraguan registry, and Managua refused to respond to inquiries from investigators. In January 2026, investigators discovered 77 vessels operating falsely under the flags of Aruba, Curaçao, and Sint Maarten. One cache of forgeries contained the papers of 63 oil tankers. Forged documents not only facilitate smuggling but pose a safety hazard as illegally registered ships lack insurance and structural inspections.
Panama’s structural vulnerability involves more than cloned registries. In January 2023, Panamanian authorities reported purging 136 ships linked to the National Iranian Oil Company. Despite those efforts, Panamanian flags flew over 116 of 542 tracked shadow tankers in August 2025, representing roughly 21 percent of the global fleet. In tandem, a Panamanian firm named Ocean Glory Giant owned and operated Masal, a vessel that in 2024 moved over one million barrels of Iranian crude around the world. Panamanian registrations similarly shielded other ghost vessels such as Fiona II, Black Panther, and Merope. Simply revoking a registration is insufficient if the owners can purchase a new flag.
Nor are tankers alone in illicit trade. In April 2026, Washington exposed an oil-for-gold network involving the trade of Iranian oil for Venezuelan gold. President Nicolás Maduro’s regime used Iran’s Mahan Air to deliver the bullion to Tehran to fund the Islamic Revolutionary Guard Corps’ Qods Force.
The threat in the Western Hemisphere extends beyond front companies to displays of military power. Last year, the Iranian warships Makran and Dena bypassed the Panama Canal entirely to transit the Strait of Magellan, before docking in Rio de Janeiro. While the Biden administration did little more than fulminate, the fact that Brazil agreed to host these armed, drone-capable vessels reflects the decline of American deterrence and influence.
When Latin American governments conclude the United States is a paper tiger, they embrace Iran’s illicit trade. In October 2025, the sanctioned vessel Delruba unloaded 60,000 tons of Iranian urea valued at $24.4 million in São Francisco do Sul. Previously, Brazil’s Supreme Court ordered Petrobras to refuel two stranded Iranian cargo ships, despite U.S. sanctions warnings.
Smugglers exploit legitimate port calls to fabricate cover documents for future illicit operations. Leaked emails reveal that the tanker CS Aura used Oceanic Fortune’s valid Brazilian voyage documents to mislead Chinese authorities about a smuggling operation. The inspectors only identified the deceit because of false information in the first document. The situation is analogous to a teenager using his brother’s driver’s license to purchase beer, rather than crafting a fake one from scratch, only to discover his brother was also using a fake license.
Across the Atlantic, European ports such as Spain’s Las Palmas and Santa Cruz de Tenerife provide fuel, service, and crew changes to the shadow fleet. New Zealand-based insurer Maritime Mutual Tankers insured ships carrying hundreds of millions of dollars in sanctioned Iranian oil before the British imposed an embargo in February 2026.
By tracing the entire chain supplying and supporting the ghost fleet, U.S. policymakers should be able to identify cut off relevant companies that deliberately aided the Iranian shadow fleet or did so by failing to do their due diligence. Whereas seizing oil cargoes will temporarily inflict financial damage, cutting off refueling and servicing will deprive the ghost fleet of the opportunity to replace the contraband.
Indeed, Treasury officials should make voluntary maritime advisories a permanent regulation for insurers and lenders. They should require shipowners to reconstruct 12 months of voyage data and cargo manifests before the Office of Foreign Assets Control approves contracts. They should supplement this with the compilation of extensive dossiers on Iranian and Venezuelan ships involved in illicit trafficking, using satellite imagery and port logs as evidence.
The time has come for Washington to fine the private registry companies that benefit from fraudulent certificates, not just the flag states themselves.
The United States should deny blacklisted tankers coverage and credit unless they clear an independent audit, and those financing them should face more severe secondary sanctions. Enforcement dossiers for these ships should link to their permanent hull identification numbers to ensure that any changes in names, flags, or ownership do not allow them to evade.
Washington should also treat defaulting flag registries as delinquent shell banks. Should any authorized registry maintain three ships on its registry for 90 days after notification, Treasury must enforce a mandatory compliance audit. Registry owners facilitating such evasion should be subject to asset freezes and denied access to the dollar-clearing system. Publication of beneficial ownership, port checks, and Coast Guard access to their registry databases would be an appropriate remedy.
The time has come for Washington to fine the private registry companies that benefit from fraudulent certificates, not just the flag states themselves. Working with Panama to verify insurance policies, for example, would allow the United States to safeguard the waterway without jeopardizing Canal neutrality. In contrast, only leaning on the Strait of Hormuz will never replace the need for aggressive measures targeting commercial infrastructure facilitating Tehran’s illicit maritime trade worldwide.
