Iran
September 25, 2019

U.S. Sanctions Chinese Companies for Transporting Iranian Crude

By Samuel Rubenfeld and Edmund Xu

 

 

This report has been updated with additional information from the U.S. and Chinese governments, and research by Kharon.

The U.S. State Department on Wednesday imposed sanctions on subsidiaries of a Chinese shipping giant over its alleged involvement in the transport of Iranian crude oil.

The designations block the assets of COSCO Shipping Tanker (Dalian) Co. and COSCO Shipping Tanker (Dalian) Seaman and Ship Management Co., and their executives and subsidiaries, but not those of their parent company, Cosco Shipping Corporation Ltd. (COSCO), according to a guidance notice issued by the U.S. Treasury Department.

The sanctions do not apply to COSCO or to its other subsidiaries or affiliates, as long as they are not majority owned by those designated Wednesday, the Treasury notice said. As such, U.S. and non-U.S. persons are permitted to deal with COSCO and the affiliates not blocked by the sanctions, according to the Treasury notice. 

The companies, according to the Treasury’s notice, “met the criteria for the imposition of sanctions” under an August 2018 executive order reimposing sanctions on Iran following the U.S. exit from the nuclear deal. Under the order, the Secretary of State, in consultation with other executive agencies, is authorized to impose sanctions on anyone engaged in a significant transaction for the sale, supply or transfer of petroleum or petroleum products from Iran.

In addition to the COSCO subsidiaries, the State Department also sanctioned China Concord Petroleum Co. Limited, Kunlun Shipping Company Limited and Pegasus 88 Limited. 

The State Department late Wednesday announced the designations in a statement from Secretary of State Mike Pompeo. The sanctioned companies and individuals took part in a significant transaction concerning Iranian crude after May 2, he said, the last day Chinese companies could buy Iran’s oil without risking U.S. sanctions

“This is one of the largest sanctions actions the U.S. has taken against entities and individuals identified as transporting Iranian oil since our sanctions were re-imposed in November 2018,” Pompeo said. “This action is aimed to deny the Iranian regime critical income to engage in foreign conflicts, advance its ballistic missile development and fund terror around the world.”

Kharon research

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