US Sanctions Chinese Oil Company for Dealing With Iran
The State Department announced sanctions on Zhuhai Zhenrong, China’s state-owned oil company, for buying petroleum from Iran, according to a notice in the Aug. 15 Federal Register. The sanctions -- which target the company and Youmin Li, its executive director and general manager -- take effect Sept. 16.
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The sanctions on Zhuhai Zhenrong block any transactions with the company that involve the U.S., including bank payments and purchasing of equity or debt. The sanctions also block all U.S. property belonging to Zhuhai Zhenrong and place restrictions on imports of the company’s “goods, technology, or services” into the U.S. The measures block Youmin from traveling to the U.S. and prohibit any dealings with Youmin involving U.S. banks, credit or property, the notice said. The sanctions also restrict all U.S. people and companies from importing goods or services from Youmin.
Some of the U.S.’s most significant actions against China, such as U.S. restrictions on Huawei, stem from the country’s violation of U.S. sanctions on Iran, according to an Aug. 12 post from Harris Bricken. The U.S. may look to increase restrictions and begin sanctioning Chinese banks financing the oil trades, the post said. The post also points to a potential “nuclear” option, where Chinese banks would be blocked from dealing with the Clearing House Interbank Payments System and the Society for Worldwide Interbank Financial Telecommunication system.
The State Department previously announced sanctions on Zhuhai Zhenrong and Youmin in July for purchasing oil from Iran after the expiration of China’s Significant Reduction Exception, which allowed China to buy Iranian oil until May. The move in July sent a “message” to other companies trading with Iran and was expected to raise trade tensions between China and the U.S., according to a July 23 post from Steptoe & Johnson.
The post said the U.S. may have imposed sanctions on Zhuhai Zhenrong because of reports that the company is “largely disconnected from the Chinese financial system” and would “not have as severe consequences as sanctions on other major Chinese companies.” The move “should get the global industry’s attention,” the post said.