U.S. Punishes Chinese Company Over Iranian Oil

The Trump administration is imposing economic sanctions on a Chinese state-owned oil trading company and its top executive for buying Iranian oil in violation of an American ban, Secretary of State Mike Pompeo said Monday.

Mr. Pompeo said in a foreign policy speech at a veterans’ convention in Florida that the company, Zhuhai Zhenrong, and its chief executive, Li Youmin, were “violating U.S. restrictions on Iran’s oil sector.” It is the first time the Trump administration has penalized a Chinese company and executive for defying recent United States sanctions on Iranian oil exports.

The move is certain to increase tensions between Washington and Beijing, which are embroiled in a long-running trade war and a strategic competition that spans the globe.

It is also certain to add to a crisis in the Persian Gulf region, where the United States and Iran are trading low-level hostilities and where Iranian soldiers are boarding or seizing commercial ships.

The Treasury Department, which enforces sanctions, added the Chinese names announced by Mr. Pompeo to a list of Iran-related designations on Monday.

Oil is the largest revenue source for Iran, and the Trump administration aims to bring those exports to zero as part of a sanctions campaign to force Iran to curb any ambitions it might have for a nuclear weapon and its support of militias in the Middle East.

After withdrawing last year from a nuclear containment deal that Iran reached with world powers in 2015, Mr. Trump announced major sanctions on Iran. The move was widely criticized by many governments because Iran had been abiding by the nuclear agreement, which offered sanctions relief in return for Iranian compliance.

Despite the new rounds of sanctions, the Trump administration granted waivers in November to allow eight governments to continue buying oil from Iran. Those waivers ended in May, and Mr. Pompeo and other Trump officials said the five nations that actually used the waivers would need to stop all imports of Iranian oil. China is the largest importer of Iranian oil.

Officials in Beijing said they did not agree with the American sanctions and would continue to import oil.

“China consistently opposes U.S. unilateral sanctions,” Geng Shuang, a Foreign Ministry spokesman, said on April 22, when the State Department announced the imminent end of the waivers. “The Chinese government is committed to protecting the legitimate rights and interests of Chinese enterprises.”

Zhuhai Zhenrong and Sinopec, another state-owned enterprise, are the two main Chinese companies that import Iranian oil.

Tankers have been unloading millions of barrels of Iranian oil at Chinese ports, where the oil is being kept in what is called “bonded storage,” Bloomberg News reported on Monday, citing people familiar with the actions.

The oil has not passed through Chinese customs or shown up on national import data and may not technically violate the American sanctions because it is still owned by Iran, the report said.

The United States has already gone after a Chinese company in one prominent case related to Iran sanctions.

In December, at the request of the United States, Canadian officials arrested Meng Wanzhou, a top executive of Huawei, the giant Chinese technology company, as she was passing through Vancouver. The Justice Department is seeking her extradition to the United States on charges of lying to Western banks in a scheme that allowed Huawei to secretly violate sanctions on Iran. The Justice Department opened the investigation during the Obama administration.

In mid-June, China received its first delivery of Iranian oil cargo since the Trump administration ended the oil waivers on May 2, the Financial Times reported, citing data from TankerTrackers, which monitors oil shipments through satellite signals and imagery. In that case, the tanker Salina, which can carry up to a million barrels of crude oil, docked at Jianzhou Bay, near the east coast city of Qingdao, on June 20 and unloaded over two days.

Senator Marco Rubio, Republican of Florida, has called on the Trump administration to take tougher action to end all Iranian oil exports. After the Financial Times published its report on June 26, Mr. Rubio wrote on Twitter, “The Administration stopped issuing sanctions waivers for Iranian oil exports in May, yet China just received massive oil cargo from Iran.”

Source: NYT

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