Malaysia Cracks Down on Illegal Oil Transfers at Sea: Targeting Shadow Tanker Fleet
By Shipping Inbox Reporter | Kuala Lumpur | August 4, 2025
Malaysia has enacted sweeping new maritime regulations aimed at curbing illegal ship-to-ship (STS) oil transfers in its territorial waters, a decisive move expected to disrupt operations of the shadow tanker fleet moving sanctioned oil—primarily from Iran and Russia—to China.
The new rules, announced this week, impose strict enforcement on vessels engaging in unauthorised offshore oil transfers. Under the updated policy, ships found violating STS regulations will face immediate detention, with release processes likely to take several weeks, Malaysian maritime authorities said.
The Malaysian Maritime Enforcement Agency (MMEA) has been ordered to bolster patrols and surveillance across the country’s territorial waters and Exclusive Economic Zone (EEZ). Authorities have also closed a crucial offshore zone that has long served as a hub for these covert activities.
Closure of Key Anchorage Area
The anchorage at Tompok Utara, located near the eastern entrance of the Singapore Strait, has been shut down. Known to the industry as the East Outer Port Limits (EOPL), the area has been a focal point for offshore STS operations, particularly involving tankers engaged in opaque or high-risk oil trades.
In a marine advisory issued yesterday, the Singapore Shipping Association (SSA) confirmed the closure, warning operators that vessels can no longer anchor at Tompok Utara without explicit prior approval from the Malaysian Marine Department (MMD).
“Vessels anchoring at Tompok Utara without authorisation will be deemed in violation of national regulations and face enforcement action,” the SSA said, echoing Malaysian government warnings.
Stricter Controls Rolled Out
In addition to the anchorage closure, Malaysia’s new rules now require ships to:
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Keep their AIS (Automatic Identification System) transponders on and active at all times;
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Anchor only within officially designated areas inside port limits;
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Secure formal, pre-arranged approval from Malaysian port authorities before carrying out STS or lay-up activities.
Failure to adhere to these requirements will trigger swift enforcement by the MMEA, which has pledged “zero tolerance” for violations.
“This is not just about compliance paperwork—this is national security and environmental integrity,” an MMEA spokesperson said on condition of anonymity. “We will take action against vessels, owners, and agents who disregard these directives.”
Targeting the Shadow Fleet
The crackdown comes amid rising international scrutiny of shadow fleet operations—a loosely connected network of ageing, opaque, and often uninsured oil tankers used to evade sanctions on Iranian and Russian crude.
Malaysia’s maritime geography—especially its proximity to key global shipping lanes—has made it a prime location for mid-sea oil transfers. These transfers are often conducted between vessels with obscured ownership and AIS blackouts, tactics used to hide the origin or destination of cargoes.
“If effectively executed, this would positively impact the tanker market by making the non-compliant trade of Iranian oil more difficult,” noted a shipping market update from Swedish bank SEB. “This could tighten available supply, potentially prompting China to source compliant barrels from other exporters.”
Regional and Global Implications
Analysts say the enforcement move by Malaysia could lead to ripple effects across global energy and shipping markets, particularly as China continues to rely heavily on discounted oil from sanctioned states.
“This could cause temporary disruptions in supply chains that use the Strait of Malacca route,” said Wong Kian Kee, a maritime security expert based in Johor. “It also signals that Southeast Asian nations are becoming more aligned with international sanctions enforcement, whether officially or in practice.”
For now, Malaysia’s bold new measures place it squarely in the spotlight as regional and global authorities watch to see whether the country can effectively clamp down on a practice that has long thrived in maritime grey zones.
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