US targets Chinese shippers over Iran oil trade

  • Market: Crude oil
  • 09/25/19

The US Treasury Department today placed two subsidiaries of China's state-owned Cosco Shipping and other Chinese shippers on the US sanctions list, citing their participation in Iran oil trade in contravention of US sanctions.

Today's action is the latest signal from Washington that it intends to tighten sanctions intended to cut off Iran's oil exports and other sources of foreign exchange, even as US allies advocate for some form of sanctions relief for Iran.

Treasury will target shippers Cosco Shipping Tanker Dalian, Cosco Shipping Tanker Dalian Seaman and Ship Management, Kunlun Holding and Hong Kong-based energy trader China Concord Petroleum for transporting oil from Iran. The companies' executive officers also were placed on the US sanctions list.

"We are telling China, and all nations: 'Know that we will sanction every violation of sanctionable activity,'" US secretary of state Mike Pompeo said today at a New York forum hosted by United Against Nuclear Iran, an anti-Iran advocacy group.

The US since early May has enforced a total sanctions ban on Iranian crude exports. But Iran continues to export as much as 200,000 b/d, according to the IEA, with more shipments thought to be unaccounted for, despite the US sanctions. Treasury estimated Iranian exports at 500,000 b/d in August.

China is the main recipient of Iran's current exports, barring some deliveries to Syria. China imported 185,000 b/d in August from Iran, just a quarter of the year-earlier levels, Chinese official customs data show. China's crude imports from Iran averaged 216,000 b/d in May-August.

The US in July imposed sanctions on Chinese state-owned trading firm Zhuhai Zhenrong for allegedly continuing to take Iranian crude.

But continuing to target Chinese firms is not an easy task, despite the US vow to strictly enforce its sanctions. Washington and Beijing are locked in a trade war and have ongoing disagreements over Iran and Venezuela, as well as China's activities in the South China Sea. And the size of Chinese companies and their participation in global economy could lead to broader repercussions if US sanctions cut them off from the dollar-based financial system.

Treasury clarified that its action does not target Cosco's parent company, a major tanker and LNG fleet operator. Companies in the US and the rest of the world are not prohibited from dealing with parent company Cosco Shipping, Treasury's Office of Foreign Assets Control said in a guidance today.


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