President Trump’s administration is confronting a new challenge in its campaign against Iran’s oil revenue. While U.S. warships enforce a naval blockade at the mouth of the Persian Gulf, nearly 40 million barrels of Iranian crude remain aboard large tankers in waters near Malaysia, east of Singapore. The cargo, equivalent to about 20 very large crude carriers, sits outside the blockade zone and could still be sold to buyers, potentially funding Tehran’s military rebuild.
Operation Economic Outcast and the Zero‑Leakage Goal
On Sunday, Treasury Secretary Scott Bessent announced Operation Economic Outcast, a comprehensive effort to cut off every remaining source of revenue for the Iranian regime. The operation’s centerpiece is a “zero‑leakage” approach that seeks to prevent any Iranian oil—whether newly exported or already stored abroad—from generating cash for the government.
According to provisional data from Kpler, China’s imports of Iranian crude have already fallen sharply, dropping from an estimated 823,000 barrels per day in July to about 534,000 barrels per day this month. The decline suggests that the blockade and related sanctions are having an impact on fresh exports.
Floating Stockpiles Remain a Test
Reuters reports that Iran holds roughly 80 million barrels of crude in floating storage, with about half of that volume located on vessels near Malaysia. These tankers represent a test of the administration’s ability to achieve “total isolation” of the Iranian economy.
“The blockade as it’s currently being practiced and enforced isn’t really stopping the flow of Iranian oil that’s already past the blockade line,” said Max Meizlish, a former Treasury official now senior fellow at the Foundation for Defense of Democracies. He explained that ship‑to‑ship transfers at sea can obscure the oil’s origin before it reaches an independent Chinese refinery.
Financial Channels and Ongoing Sanctions
Iran typically settles oil sales in Chinese yuan, using exchange houses and front companies to convert the proceeds into usable currencies. The Treasury has previously linked oil revenues to the Iranian government, the Islamic Revolutionary Guard Corps, weapons development, and regional proxies.
While the administration has sanctioned Chinese and Hong Kong trading houses, maritime service providers, and other entities accused of facilitating sanctions evasion, it has stopped short of designating a Chinese financial institution. Meizlish argued that formally adding a major Chinese bank to the Specially Designated Nationals list could pressure its owner, China National Petroleum Corporation, and disrupt a key channel for moving Iranian oil money.
Targeting the Malaysia Route
In April, Treasury sanctioned the Hong Kong‑flagged tanker Lynn for conducting a ship‑to‑ship transfer of Iranian crude off Malaysia before delivering the cargo to China. Meizlish suggested expanding pressure on “shadow‑fleet” vessels operating near Malaysia and elsewhere in Asia to keep the oil from reaching Chinese buyers.
“There’s a lot more that we can do,” he said. “Unless we expect this regime to ultimately fall, we should be putting a lot of pressure into interdicting this oil that’s on the market right now on shadow‑fleet tankers, because this money could eventually go into the regime’s pockets down the road.”
Military and Legal Constraints
A War Department official told Fox News Digital that U.S. forces will continue “global maritime enforcement” to disrupt illicit networks and interdict sanctioned vessels wherever they operate. However, Meizlish warned that seizing ships is legally complex and could stretch an already busy U.S. Navy, which is engaged in operations throughout the Strait of Hormuz and beyond.
Congress could make it easier for the government to seize illicit cargoes, and the administration is exploring ways to expand its capacity to pursue shadow‑fleet vessels if naval resources are insufficient.
Broader Scope of the Campaign
Operation Economic Outcast also targets digital assets, technology, gold, aviation, and shipping, and threatens secondary sanctions against entities that continue doing business with Tehran. Treasury spokespersons emphasized that anyone foolish enough to support the Iranian regime will lose access to the global financial system.
The drop in Chinese purchases indicates that pressure is working, but the millions of barrels already sitting outside the blockade remain a potential source of revenue for Tehran. How aggressively the Trump administration moves against these tankers will determine whether the “zero‑leakage” promise becomes a reality.
Original reporting: Fox News (HLL/CB) — read the source article.
