U.S. Lifts Sanctions on COSCO's VLCCs

The U.S. Treasury has lifted sanctions on Chinese crude tanker operator COSCO Shipping Tanker (Dalian) Co. Ltd., a division of state-owned China COSCO. The tanker unit was blacklisted in September 2019 for allegedly violating American sanctions on Iran. 

The delisting comes just days before temporary waivers allowing business with COSCO Shipping Tanker (Dalian) were set to expire. It also follows shortly after the successful negotiation of a "phase one" trade deal between Beijing and Washington, which has seen both sides take a pause from escalating tariffs on trans-Pacific trade. 

The sanctions on COSCO Shipping Tanker (Dalian) had taken about two dozen VLCCs off the global market, boosting day rates to historic highs in October. The return of COSCO's tankers will reduce competitors' revenue going forward, analysts said. 

“With all of the sanctioned tankers back in the open market, overcapacity will weigh even faster and heavier on rates,” said BIMCO chief analyst Peter Sand on Friday. “In combination with demand being low from China, this will be an added burden for the crude oil tanker market.”

The U.S. Treasury targeted COSCO's tanker operations when COSCO allegedly continued to carry Iranian oil after the expiration of a waiver period. The United States forbids most financial transactions with Iranian entities, including virtually all transactions in the oil and gas, maritime and ports sectors.  

COSCO Shipping Tanker (Dalian)'s general manager, Xu Yazhou, has also been removed from the sanctions list. A second, related COSCO subsidiary - COSCO Shipping Tanker (Dalian) Seaman & Ship Management Co., Ltd. - remains sanctioned.