- China's imports of Malaysian crude oil have soared to nearly 800,000 barrels per day, according to data compiled by Bloomberg.
- That's more oil than what Malaysia actually produces on its own, suggesting some crude arrived from other sources.
- The waters off Malaysia are known for ship-to-ship transfers that mix crude to hide its origin.
Chinese imports of Malaysian crude oil jumped to 791,000 barrels per day in July, more than double the amount from the start of the year, according to data compiled by Bloomberg.
The problem? Last month's figure is actually more oil than what Malaysia actually produces on its own, suggesting some of the crude arrived from other sources before being shipped off to China.
The waters off Malaysia are a notorious location for ship-to-ship transfers, where crude from various locations is mixed to hide its origin, then rebranded and sold elsewhere.
The practice of "dark" ship-to-ship transfers has become more common since Russia invaded Ukraine, as global market participants look to avoid the reputational risks of doing business with Moscow. Russian oil tankers have also disappeared from tracking systems near Portugal's Azores islands by turning off their location data.
Wary buyers have also attempted to avoid affiliation with the sanctioned nation through obfuscating the origins of crude and trading oil marked "destination unknown."
According to Bloomberg, the imports of Malaysian oil are likely a mix of barrels originating from Iran, Venezuela and Russia.
Meanwhile, fuel oil shipments from those three nations are using a key export hub in the UAE and being disguised for export, traders told the Wall Street Journal.
Still, separate data show Russian crude exports to Asia reached a five-month low last week, declining by roughly 500,000 barrels per day.