The United States has sanctioned China‘s state-run oil trader Zhuhai Zhenrong Corp for allegedly violating restrictions imposed on Iran‘s oil sector, Secretary of State Mike Pompeo announced in a speech on Monday.
“We’ve said that we will sanction any sanctionable behaviour, and we mean it,” Pompeo said during remarks in Florida.
The move comes amid increased tensions between Iran and the West – as well as frosty relations between the US and China, though they have restarted major trade talks.
President Donald Trump’s administration has stepped up its sanctions against Iran after breaking from the nuclear pact brokered between Tehran and Western nations under the previous administration.
Meanwhile, China’s embassy in Washington rejected Pompeo’s declaration.
“China firmly opposes the US imposition of unilateral sanctions and so-called ‘long-arm jurisdiction’ on China and other countries invoking its domestic law,” an embassy spokesperson told the Reuters news agency via email.
“We urge the US to immediately correct its wrongdoing and earnestly respect other parties’ legal rights and interests,” the spokesperson continued.
Zhuhai Zhenrong, which specialises mainly in buying Iranian oil and which is based in Beijing, was previously sanctioned over its dealings with Iran in 2012 by the administration of former US President Barack Obama.
The company is now a subsidiary of Macau-based, state-controlled conglomerate Nam Kwong Group.
It is largely disconnected from the Chinese financial system, limiting the “contagion” of the sanctions and preventing them from affecting other entities and banking systems, analysts at ClearView Energy Partners said.
But Washington’s move is another shot across the bow that reflects the seriousness of the Trump administration’s stance on Iran.
“We see the shot as being aimed [not] just at China, but also at other potential buyers,” ClearView said, noting that Turkey and possibly Russia could serve as middlemen for brokering oil from Iran to other countries.
The US reimposed sanctions on Iran in November after pulling out of the 2015 nuclear accord between Tehran and six world powers.
Last month, the US special representative for Iran, Brian Hook, said Washington will sanction any country that continues to import Iranian oil and warned that it would look at reports of Iranian crude going to China.
According to data from government and trade sources, Asia’s crude oil imports from Iran fell in May to the lowest level in at least five years. China and India have significantly reduced purchases, while Japan and South Korea have halted imports entirely.