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U.S. Sanctions Chinese Firm for Buying Iranian Oil

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Iranian FSO transferring oil (NITC)

By The Maritime Executive 2019-07-22 22:30:02

In an address at an event in Florida on Monday, U.S. Secretary of State Mike Pompeo said that the United States has blacklisted Chinese state energy company Zhuhai Zhenrong Co. Ltd. for allegedly buying oil from Iran. The United States has imposed unilateral sanctions on Iran's petroleum, shipping and financial sectors since last November, and a set of limited import waivers expired May 2. The U.S. State Department contends that Zhuhai Zhenrong kept buying Iranian oil after this deadline passed. 

"We said we would fully enforce our sanctions, and we are backing this up with real action. The announcement today will help deny the [Iranian] regime critical income to fund terror around the world, engage in foreign conflicts, and advance its ballistic missile development," Pompeo said in a statement. 

The head of Zhuhai Zhenrong, Li Youmin, has also been added to the U.S. Treasury's blacklist (the List of Specially Designated Nationals and Blocked Persons, or SDNs).

China is the largest buyer of Iran's oil, and the move prompted a swift response from Chinese diplomats. “China firmly opposes the US imposition of unilateral sanctions and so-called 'long-arm jurisdiction' on China and other countries invoking its domestic law,” the Chinese embassy in Washington, D.C. told Reuters in a statement. “We urge the US to immediately correct its wrongdoing and earnestly respect other parties' legal rights and interests.”

The White House aims to drive Iran's oil exports down to zero as part of its effort to exert "maximum pressure" on Iran's leadership. The move to sanction a state-owned Chinese oil buyer sends a message to other potential importers, analysts said, and it is certain to raise tensions with Beijing at a time when the U.S. and China are negotiating on trade and tariffs. 

Zhuhai Zhenrong is based in Macau, not mainland China, and analysts say that it is intended to function as a separate entity for the purpose of trading with Iran. In May, consultancy ESAI Energy predicted that Zhuhai would keep purchasing in spite of the ban while the larger, better-known Chinese state oil firms would comply.