US sanctions on Chinese firm boost pressure on Iranian oil trade
The United States has imposed sanctions on the Chinese company Shandong Shouguang Luqing Petrochemical for purchasing Iranian oil, thereby violating American restrictions. This marks the first such action against China, which may also influence the supply of Russian oil.
The US administration has decided to sanction the Chinese firm Shandong Shouguang Luqing Petrochemical for acquiring oil from Iran, in breach of American restrictions.
According to "The Moscow Times", the company from Shandong Province bought millions of barrels of oil worth approximately 385 million pounds. The oil was transported by ships from the so-called shadow fleet, which were also sanctioned for supporting Yemeni Houthis, an organisation considered terrorist by the USA.
Sanctions and impact on Russia
Sanctions levied against the Chinese company may also influence the supply of Russian oil, notes "The Moscow Times." Shandong Province, where Shandong Shouguang Luqing Petrochemical operates, is a key oil processing hub for private Chinese companies. Although Chinese enterprises actively purchased Russian oil, the flow decreased after the sanctions were introduced by the Joe Biden administration in January 2025.
The US administration has imposed new sanctions on tankers transporting Iranian oil to China, also targeting the Iranian oil minister. This is part of the "maximum pressure" strategy designed to curb the nuclear threat and Iran's missile programme. The sanctions have affected 16 tankers from the shadow fleet, aiming to cut Iranian oil exports to zero.
Costs will rise
US sanctions are slowing the flow of Iranian oil to China, causing transportation costs to rise by 50 per cent. Chinese ports are rejecting sanctioned tankers, forcing traders to use risky methods to circumvent restrictions. Nevertheless, China does not plan to halt importing Iranian oil, which is offered at substantial discounts.
Iran is grappling with a limited fleet of tankers, complicating efforts to fulfil oil delivery contracts to China. In 2024, Iran utilised 150 tankers, with more than 100 under sanction. Exports have dropped to 1.5 million barrels per day (approximately 240 million litres per day), and by May, this could fall by one-third.
Russia, Iran, and Venezuela are vying for available tankers, making it difficult for Iran to sell oil. The global fleet of tankers has shrunk, and many lack confirmed insurance. The average age of the sanctioned ships is 21 years, though this does not deter African companies from exploiting them.
