China iran

US Slaps Chinese Company Zhuhai Zhengrong With Sanctions For Dealing In Iranian Oil

'We’ve said that we will sanction any sanctionable behavior and we mean it".

‘We’ve said that we will sanction any sanctionable behavior and we mean it”, Mike Pompeo said in Florida on Monday, explaining new action against Chinese energy firm Zhuhai Zhengrong.

Long story short, the company transports Iranian crude, which isn’t something the US is particularly enamored with considering Trump’s entire “maximum pressure” campaign revolves around choking off the theocracy’s oil revenue.

Here are Pomepo’s remarks, delivered in a speech:

As part of that maximum pressure campaign, I am announcing that the United States is imposing sanctions on the Chinese entity Zhuhai Zhenrong and its chief executive Youmin Li. They violated US law by accepting crude oil. We’ve said all along that any sanction will indeed be enforced. We can’t tolerate more money going to ayatollahs, putting American soldiers, sailors, airmen, marines, putting their lives at risk. It’s too important.

Beijing-based Zhuhai Zhengrong (a subsidiary of the Macau-based, state-run Nam Kwong Group) specializes in purchasing Iranian product, and, as Reuters notes, the company “was previously sanctioned in 2012 by the Obama administration over its dealings with Iran”.

Of course, China is a major buyer of Iranian oil. As BofA’s Francisco Blanch wrote in June while documenting an “uber-bearish” case for crude (not the bank’s base case, by the way), Iran “has historically been China’s number 3 supplier, so recent curtailments in Iran oil imports to comply with US sanctions suggest that China is still serious about getting a trade deal done”.

At various intervals, Beijing has pushed back on US demands that everyone on the planet cease importing Iranian oil. Indeed, China recently ramped up imports after initially reducing them.

(BofA)

Back in April, Trump took the market by surprise, when the administration announced it would not extend waivers granted in November, a sign the US intended to turn the screws on Tehran in earnest. Things have obviously escalated since then.

While Beijing may be loath to irk Trump at a time when trade discussions have barely resumed following the handshake deal struck in Osaka, it’s worth noting that millions of barrels of Iranian oil are sitting in bonded storage at Chinese ports, just waiting to be tapped by refiners.

“This supply doesn’t cross local customs or show up in the nation’s import data, and isn’t necessarily in breach of sanctions”, Bloomberg wrote Monday, in a great article detailing the situation. The crude in question is technically still owned by Tehran and is classified as “in transit”. Speaking of “in transit”, the same article says millions of additional barrels are likely headed for Chinese bonded storage.

It still isn’t clear how the Trump administration intends to classify that oil, but one assumes it will be seen as violating the spirit of the sanctions if not the letter of the “law”.

BofA’s Blanch warned last month that a rekindling of trade tensions could mean China simply refuses to comply with US demands regarding Iranian product. Any additional escalations in the trade war could also deep-six demand for crude by weighing further on the outlook for global growth. If slumping demand were to collide with the large scale purchase of Iranian crude by Chinese refiners, oil prices could plunge, Blanch suggested.

Pompeo told The Wall Street Journal on Monday that Zhuhai Zhenrong and its executives knew they were violating US sanctions.

Apparently, they didn’t care.


 

2 comments on “US Slaps Chinese Company Zhuhai Zhengrong With Sanctions For Dealing In Iranian Oil

  1. Bryanb says:

    I am a little confused. Do America courts implement the letter of the law or the spirit of the law? I thought the bush Florida legal basis was the letter of the law, but I may be wrong.

    • Harvey Cotton says:

      It is neither. It is another venue for political opinions. Liberals and conservatives will use whatever legal justification exists to rule for the policy they want implemented.

      There is a saying in law school. If the law is on your side, pound the law. If the facts are on your side, pound the facts. If neither is on your side, pound the table. Left-wing and right-wing judges and justices will flip back and forth between origination, or natural law, or positivism or whatever tool they think they can use to somehow convince people that the sausage-making process of legislating law somehow becomes apolitical in its interpretation, when judges and justices are either appointed and confirmed by politicians, or are themselves elected.

      In Bush v. Gore, for example, you have a federal election run by the several States. If you are a states’ rights, small government Republican, you want Florida to have the right to recount the election as it sees fit and then apportion its own Electors. If you are a big government, equal protection Democrat, you generally want a single federal standard to be applied. Yet, somehow, by some coincidence, the conservative Justices sided with Bush and the liberal ones sided with Gore. If Gore had won the initial Florida vote, doubtless all nine Justices would have reversed themselves. The concept of American jurisprudence is a long running, unfunny joke.

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