Oil & Gas

23 Jul 2019

U.S. Sanctions Chinese State Energy Company Zhuhai Zhenrong Co. Ltd. for Buying Oil From Iran


Iranian FSO transferring oil (NITC)

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 strict zero-tolerance regime for all Iranian oil exports has been in place since May.

Li Youmin, the head of Zhuhai Zhenrong, has also been added to the blacklist. The move will restrict Li's ability to travel to the United States, among other effects.

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 is intended to function as a separate entity for the purpose of trading with Iran. When the U.S. ended a temporary waiver program for leading buyers of Iranian crude in May, analysts with ESAI Energy predicted that Zhuhai would keep purchasing in spite of the ban while the larger, better-known state oil firms would comply.

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