Malaysia's maritime enforcement agency says Iranian-linked tankers are exploiting jurisdictional gaps to conduct ship-to-ship transfers of sanctioned oil near its waters, rejecting claims that it has ignored the activity. Officials said the transfers take place outside Malaysian territorial waters in remote areas beyond radar coverage, limiting direct enforcement action.

Waters near the southern state of Johor, particularly the area known as the Eastern Outer Port Limits in the South China Sea, have been identified by advocacy group United Against Nuclear Iran as a hub for transfers involving aging vessels that often disable tracking systems and conceal ownership. The group says dozens of transfers have occurred there since late February, alleging Malaysia is enabling Iran to evade sanctions and continue exports largely bound for China.

Malaysian authorities dispute the accusations, saying the operations occur in international waters along busy shipping routes and are complicated by limited real-time intelligence sharing. While ship-to-ship transfers are not illegal, Malaysia discourages unsanctioned operations outside designated areas due to environmental and safety risks, especially involving older vessels operating far from ports.

Despite a blockade of Iranian ports that began in mid-April, advocacy monitors report that Iranian-linked tankers continue to anchor or loiter near the transfer zone, suggesting the trade persists.