Oil traders around the world are scrambling to avoid being involved in the latest U.S. sanctions regarding Iranian oil after the United States imposed on Wednesday sanctions on a number of Chinese tanker owning firms and executives for transporting Iranian oil in violation of the U.S. sanctions on the Islamic Republic.
“We are imposing sanctions on certain Chinese firms for knowingly engaging in a significant transaction for the transport of oil from Iran, including knowledge of sanctionable conduct, contrary to U.S. sanctions,” U.S. Secretary of State Mike Pompeo said on Wednesday, while the Department of the Treasury’s Office of Foreign Assets Control (OFAC) published a list of companies, including a unit of Cosco, which are now sanctioned for knowingly dealing with Iranian oil.
“We will take action on any sanctionable Iranian oil transaction,” Secretary Pompeo said on Twitter in a pledge that the U.S. would continue to track down and sanction anyone importing and dealing with oil coming from Iran.
China slammed the latest sanctions and demanded that the Trump Administration “immediately correct the wrong approach.”
The sanctions are a follow-up to sanctions imposed in July to a Chinese firm that had imported Iranian oil.
China, however, has defied U.S. sanctions on Iranian oil and continued to import crude from the Islamic Republic even after the U.S. ended all waivers for all Iranian customers.
The fresh sanctions on Chinese entities for dealing with Iranian oil could complicate the U.S.-China trade talks, but the sanctions already threw the oil shipping and trading sectors into chaos.
According to Bloomberg, oil traders in Asia are canceling orders with the sanctioned tanker firms to avoid being unintentionally dragged into sanctions themselves. Traders and shipping firms are also uncertain whether the oil currently traveling on board of any tankers of the sanctioned firms could be allowed to be unloaded or whether it could be transferred to tankers of companies not subject to sanctions.
By Tsvetana Paraskova for Oilprice.com
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1- US sanctions against Iran have so far failed miserably with China defying the United States and doubling its imports of Iranian crude oil.
2- The petro-yuan is successfully increasing its share of the global traded oil market and undermining the petrodollar.
3- China and Russia are working together on undermining US sanctions.
4- China has the ability to nullify the US sanctions regime against Iran exactly as they doing in Venezuela.
5- China has already won the trade war with the United States.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London