The U.S. has sanctioned a Chinese state oil trader for violating restrictions on Iranian crude, an attempt to tighten restrictions on the Islamic Republic and cut off one of its biggest buyers.
Zhuhai Zhenrong Co., the secretive company with links to the Chinese military, has a history of taking Iranian crude and fuel, at times as part of barter deals for goods or services, and then selling it on to refiners in China. The U.S. move comes at a delicate time for relations with Beijing as the two nations attempt to kick-start negotiations aimed at resolving their broader trade conflict.
Secretary of State Michael Pompeo announced the decision in a speech Monday, adding that sanctions would also be imposed on the company’s chief executive officer, Li Youmin.
“They violated U.S. law by accepting crude oil” from Iran, Pompeo said. “We’ve said all along that any sanction will indeed be enforced.”
Specifically, the company “knowingly engaged in a significant transaction for the purchase or acquisition of crude oil from Iran” after restrictions were fully in place on May 2, the state department said in a separate statement.
Li declined to comment when reached by Bloomberg News on Tuesday. The trading company merged in 2015 with Macau, China-based Nam Kwong Group, which said Tuesday that it separated from Zhuhai Zhenrong in September.
“The company mainly handles crude, oil products and other products and services trading with Iran through barter system, so the U.S sanctions has very limited impact,” said Seng Yick Tee, an analyst at Beijing-based SIA Energy.