Oil Traders Rattled by U.S. Sanctions on Chinese Shipping Firms
26 Sep 2019

Global oil shipping was thrown into disarray after the U.S. imposed penalties on a handful of Chinese tanker firms for continuing to carry Iranian crude after sanctions waivers lapsed in May.

Four shipping companies were charged with knowingly violating restrictions on handling and transacting Iranian petroleum, with additional sanctions placed against executives and two other companies that control the firms, according to statements from the U.S. Treasury and State Departments.

Oil traders in Asia scrambled to respond, canceling bookings with sanctioned entities and letting provisional charters lapse as they attempted to avoid being drawn into the stand-off between Washington and Tehran. The penalties bar U.S. citizens and companies from dealing with the firms, effectively blocking them from American banks at the heart of the global financial system.

The sanctions could also complicate talks to end the U.S.-China trade war, which are set to resume in Washington next month. China, the world’s largest crude buyer, continues to import relatively small amounts of oil and petroleum products from Iran despite the White House blocking such purchases in May.

“This is one of the largest sanctions actions the United States has taken against entities and individuals identified as transporting Iranian oil since our sanctions were re-imposed in November 2018,” Secretary of State Michael Pompeo said in a statement.

China Concord Petroleum Co., Kunlun Shipping Co., Pegasus 88 Ltd., and COSCO Shipping Tanker (Dalian) Seaman & Ship Management Co. have been charged with knowingly violating restrictions on handling and transacting Iranian petroleum. Additional restrictions were also imposed on five executives at the companies, as well as Kunlun Holding Co. and COSCO Shipping Tanker (Dalian) Co., which own or control one or more of the sanctioned entities.

The COSCO Dalian entity is 100% owned by COSCO Shipping Energy Transportation Co., which is a subsidiary of COSCO Shipping Corp., the world’s second-largest shipping company by container fleet size, according to Bloomberg Intelligence. COSCO Dalian owns or operates anywhere from 20 to 50 petroleum tankers worldwide, according to estimates from industry sources. Vessel ownership can be an opaque corner of the global shipping market.

By Serene Cheong, Dan Murtaugh and Ben Livesey, Bloomberg, 25 September 2019

Read more at Bloomberg

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