July 22, 2019

U.S. Puts Sanctions on Chinese Buyer of Iranian Crude

By Samuel Rubenfeld and Edmund Xu


This article was updated with additional research by Kharon.

The U.S. on Monday imposed sanctions on a Chinese buyer of Iranian crude and the company’s top executive. 

Zhuhai Zhenrong Company Limited and Li Youmin knowingly violated U.S. sanctions barring imports of Iranian crude, Secretary of State Mike Pompeo told The Wall Street Journal ahead of the designation. The sanctions send “an important message to the world,” the secretary was quoted as saying. “We can see these crude oil shipments move.” In a speech on Monday in Orlando at a conference for veterans, Pompeo said that “any sanction will indeed be enforced.”

“We can’t tolerate more money going to the Ayatollah, putting American soldiers, sailors, airmen, and Marines and putting their [lives] at risk,” he said, referring to Monday’s designation. 

Late Monday evening, the State Department announced the sanctions in a statement. Earlier on Monday, the Treasury Department issued a notice on its website of Li’s and Zhuhai Zhenrong’s identifiers.

The sanctions come amid heightened tensions between the two countries, including over Iranian crude sales. In May, the U.S. ended waivers for countries, including China, that had been allowed to continue buying Iran’s oil after Washington had reimposed sanctions. 

Zhuhai Zhenrong engaged in a significant transaction to purchase or acquire crude oil from Iran after China’s waiver expired on May 2, the State Department said. Li, a corporate officer and principal executive officer of the company, was banned by the State Department from entering the U.S., the statement said.

A Chinese official slammed the sanctions during a press briefing in Beijing. "We are opposed to the U.S. bullying behavior of wantonly cracking down, suppressing and sanctioning Chinese companies and individuals based on US domestic law,” Hua Chunying, spokeswoman for China's foreign ministry, was quoted by CNN as saying. "We strongly urge the U.S. to immediately rectify its wrong behavior, and stop imposing illegal sanctions against Chinese companies and individuals.”

Zhuhai Zhenrong had been sanctioned in January 2012 by the State Department for having brokered the delivery of more than $500 million in gasoline to Iran between July 2010 and January 2011. The company denied the allegation at the time of those sanctions. The U.S. had delisted Zhuhai Zhenrong in 2016 as part of its implementation of the nuclear deal with Iran.

Zhuhai Zhenrong kept buying Iranian crude throughout the period it was under sanctions, as well as during the time it was delisted, according to figures from industry consultant SIA Energy cited Tuesday by Bloomberg News. In the first five months of 2019 alone, it had imported an average of 156,000 barrels of oil a day, SIA Energy estimated. Zhuhai Zhenrong activated a clause in their supply contract with National Iranian Oil Company (NIOC) to use National Iranian Tanker Co. (NITC) vessels to safeguard its supplies as sanctions risk increased, Reuters reported in 2018, citing people familiar with the matter.

Kharon research

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