US sanctions on Chinese firm shake global oil dynamics
The USA imposed sanctions on the Chinese company, Shandong Shouguang Luqing Petrochemical, for purchasing Iranian oil, violating American restrictions. This is the first such move against China, which may affect the supply of Russian oil.
The US administration decided to impose sanctions on the Chinese firm Shandong Shouguang Luqing Petrochemical for purchasing oil from Iran, which violates American restrictions.
According to "The Moscow Times," the company from Shandong Province purchased millions of barrels of oil valued at approximately $500 million (CAD 720 million). The oil was transported by ships from the so-called shadow fleet, which were also sanctioned for supporting Yemeni Houthis, considered a terrorist organization by the USA.
Sanctions and impact on Russia
Sanctions imposed on the Chinese company may also affect the supply of Russian oil, notes "The Moscow Times." Shandong Province, where Shandong Shouguang Luqing Petrochemical operates, is a crucial oil processing centre for private Chinese companies. Although Chinese enterprises actively purchased Russian oil, its flow decreased after the sanctions were introduced by the Joe Biden administration in January 2025.
The US administration imposed new sanctions on tankers transporting Iranian oil to China, also targeting the Iranian oil minister. This is part of the "maximum pressure" policy aimed at limiting the nuclear threat and Iran's missile program. The sanctions affected 16 tankers from the shadow fleet, aiming to reduce Iranian oil exports to zero.
Costs will rise
US sanctions are slowing the flow of Iranian oil to China, raising transportation costs by 50 per cent. Chinese ports are rejecting sanctioned tankers, forcing traders to use risky methods to circumvent restrictions. Nevertheless, China does not intend to stop importing Iranian oil, which is offered at significant discounts.
Iran is struggling with a limited fleet of tankers, making it difficult to fulfill oil delivery contracts to China. In 2024, Iran used 150 tankers, more than 100 of which were sanctioned. Exports fell to 240,000 cubic metres per day, and by May, it could decrease by one-third.
Russia, Iran, and Venezuela are competing for available tankers, making it difficult for Iran to sell oil. The global fleet of tankers has shrunk, and many of them lack confirmed insurance. The average age of the sanctioned ships is 21 years, which does not deter African companies from exploiting them.
