As part of the Trump administration’s continuing pressure on parties involved in oil trading with Iran, the US Treasury Department announced that two affiliates of Cosco Shipping, Cosco Shipping Tanker (Dalian) Co and Cosco Shipping Tanker (Dalian) Seaman & Ship Management Co, have been added to the Office of Foreign Assets Control’s (OFAC) designated nationals and blocked persons list.
Another four Chinese companies on the list are China Concord Petroleum, Kunlun Holding, Kunlun Shipping, and Pegasus 88.
The US Treasury Department pointed out that the sanctions on the Cosco affiliates would not apply to their parent company Cosco Shipping.
The Trump administration has taken a harder line on imposing sanctions on Iran than the US government under Barack Obama as has been evidenced by a much steeper drop off in Iranian oil exports than the previous round of sanctions in 2014.
Read more: US sanctions crippling Iran’s oil exports leave shipping as potential ‘pressure point’
The oil trading business is handled by Cosco Shipping Energy Transportation (CSET), which operates more than 100 tankers including VLCCs, suezmaxes, aframaxes and panamaxes, according to the company website.
While a trading halt for CSET on Hong Kong was called last Thursday, the halt was lifted on Monday morning following a confirmation by CSET that its wholly-owned Dalian Tanker has been added to the OFAC list.
“The company is comprehensively organising its various businesses, assessing the relevant impact, and conducting various response work,” CSET stated.
According to Platts data, Iranian oil exports, which averaged more than 1.7m barrels per day (bpd) in March, fell below 424,500 bpd in August. Just over 204,200 bpd of Iranian exports in August went to China.
“China expresses strong indignation and firm opposition to US sanctions on Chinese businesses and individuals. China firmly opposes the US imposition of unilateral sanctions and so-called ‘long-arm jurisdiction’ and its wanton bullying and oppression of Chinese enterprises,” said Geng Shuang, spokesman of China’s Ministry of Foreign Affairs.
“China has stressed many times that the normal energy cooperation between Iran and the international community, including China, under the framework of international law is lawful and justifiable, and thus should be respected and protected.
“In disregard of the legitimate rights and interests of all parties, the US has been wantonly wielding the stick of sanctions. That grossly tramples on basic norms governing international relations and is unpopular and contrary to the trend of the times. We strongly urge the US to immediately correct its wrongdoing. China has taken and will continue to take necessary measures to safeguard the legal rights and interests of its businesses,” Geng said.
Read more: Tanker shipping nearing good times with capacity in check
Meanwhile, the tanker charter market has reacted as oil traders look to replace ships that are now under the US blacklist.
Ship brokers said that the sudden requirement by traders to find new vessels to replace a Cosco ship has boosted rates while tightening capacity.
Clarksons Platou Securities data last Friday showed daily rates for VLCCs at $45,000 a day, up 18% in a week. “The sanctions mean most Western charterers will probably avoid chartering Cosco vessels and as such mean an effective tightening of the vessel supply,” Clarksons said.
The Baltic Exchange data showed last Friday that VLCC rates on the benchmark Middle East Gulf to China route soared to $51,480 a day, the highest in nearly 11 months.
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