Last week, the United States bombed three commercial tankers in the waters off Oman, killing three Indian sailors and launching operations to rescue dozens of burning and shipwrecked ships. The United States said that this measure aims to impose a naval blockade on ships coming from or heading to Iran.
The strikes sparked an official protest from New Delhi, but the United States confirmed that the three ships violated the blockade imposed on them since mid-April. The ship’s crew and, in at least one case, the management company, have denied the accusations.
But the incident shed light on a separate question: the flags on the masts of those ships.
Two raised the flag of Palau, a small island nation in the western Pacific Ocean, and the third raised the flag of Guinea Bissau, a small country located on the Atlantic coast of West Africa.
Neither is known for the major commercial shipping industry.
While it is unclear whether the three ships were involved in any illicit activity, shipping observers and analysts say shipowners often register under the flags of small countries to evade regulatory scrutiny, and reap the benefits of lower costs and little oversight. These, the industry says, are “flags of convenience.”
“Flags of convenience”
The use of a “flag of convenience” does not in itself indicate any illegal activity, but is becoming more common with what the maritime industry calls a shadow fleet.
The shadow fleet refers to a network of tankers and support vessels that use deceptive practices to move sanctioned or high-risk goods while concealing their true origin, ownership, or destination.
HT reported last week that all three ships struck last week bore markings that naval analysts and investigators link to shadow fleet operations — sanctioned designations, safety violations, murky ownership structures and, in at least one case, the intentional disabling of tracking signals.
The Indian Ministry of External Affairs confirmed that two of the three ships were subject to sanctions by the US Office of Foreign Assets Control (OFAC), and that the third was “non-compliant.”
The Palau-flagged tanker, linked to Panama-based Arihant Shipping, was sanctioned by OFAC in December 2025 under its former name “Arihant” for allegedly carrying Iranian oil and bitumen in the Gulf. The ship was renamed and withdrawn from the Indian Register of Shipping in February 2026 – a move that would normally invalidate the insurance status and legal operation of the ship. When US forces warned it on June 7, it initially indicated compliance, then turned off its transponders to hide its location, HT reported last week.
The Settebello, on which the three Indian sailors died, had its classification suspended in 2021 and has been detained twice — in Russia’s Novorossiysk in 2022, with 29 defects, and in China’s Lianyungang in February 2026. Its owner, Aqua Aurora Shipping Lines, once shared a Chandigarh address with Global Tankers Pvt Ltd, a company whose Office of Foreign Assets Control sanctioned it in April. 2025 – although HT found the title long empty. Its operator, IOS Marine, denied any connection to Iran and said the ship had never been contacted before the strike.
The Guinea-Bissau-flagged asphalt tanker, owned by Liberia-based GAL Shipping Company, was detained at the Indian port of Haldia in February 2026 due to fire safety defects. The State Department said that no OFAC sanctions were recorded against her. People familiar with the matter told HT that the ship made multiple calls at Iranian ports and conducted ship-to-ship transfers with sanctioned ships.
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Motivation
A 2024 study published in the peer-reviewed Journal of Applied Science (MDPI) noted that shadow fleets expanded sharply after Russia invaded Ukraine in February 2022 and Western countries imposed sweeping sanctions on Moscow’s oil exports as economic punishment for the war.
To transport sanctioned oil, multiple solutions have been found. According to the study, hundreds of ships, a third of which were crude oil tankers, were used to transport sanctioned Russian crude to non-sanctioned buyers.
The study estimates that by September 2023, the fleet represented 10% of global seaborne oil transport, and about 600 tankers out of a total network of about 6,000 were involved in clandestine operations. She added that by 2024, the size of the “dark” fleet will reach 1,100 ships.
Evasion tactics largely have three purposes: to avoid tracking (which could determine where they went and what they did), avoid stricter regulatory scrutiny, and remain protected from sanctions.
Ships involved in such operations have been known to disable their Automatic Identification System (AIS) transponders — the maritime equivalent of an aircraft’s transponder, which broadcasts the ship’s identity and location in real time — to escape scrutiny.
Others engage in AIS spoofing, or broadcast false location coordinates while conducting ship-to-ship transfers of sanctioned goods in international waters. For this reason, ship-to-ship transfers of sanctioned oil are often confirmed by satellite images.
The MDPI study also documented so-called “ghost ships,” or ships manufactured entirely from false AIS signals.
Then there is “flag jumping” – quickly switching a ship’s registration across jurisdictions – to stay at the top of the sanctions rankings. Linked to this are opaque corporate ownership structures that make it difficult to trace which companies or individuals actually control the ship – an approach believed to have been used in the case of the three vessels.
The most commonly used flags include Panama, Liberia and the Marshall Islands, but as the MDPI study noted, countries such as Cameroon and Gabon are also involved. For example, the ship Gulliver flew the flag of Guinea Bissau while its owner, Gul Shipping, was registered in Liberia — illustrating how operators split registrations across multiple jurisdictions to complicate auditing, HT reported last week.
The study said that waters off West Africa have become a hotspot for AIS fraud.
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How successful is this model?
There is little clarity on how much sanctioned oil has been transferred and purchased since 2022.
But the Finland-based non-profit Center for Research on Energy and Clean Air (CREA) estimated that 113 false-flag ships transported €4.7 billion worth of Russian oil in the first three quarters of 2025 alone.
Iran, already subject to decades of US sanctions, is believed to have long relied on similar tactics to transport its oil by sea. An Al Jazeera investigation in 2026 said Tehran had built a parallel maritime system by using false flags, shell companies and broken tracking signals to subsidize exports.
When the United States imposed its naval blockade on April 13, amid the conflict in West Asia, it proved difficult to shut down this network. Lloyd’s List Intelligence, which tracks maritime traffic and data, said in a report later that month that at least 26 ships had bypassed the blockade even as Washington claimed it had halted Iranian trade entirely.
