US sanctions on Chinese petrochemical giant hit Iran oil ties
The USA has imposed sanctions on the Chinese company Shandong Shouguang Luqing Petrochemical for purchasing Iranian oil, in violation of American restrictions. This marks the first such action against China and may impact the supply of Russian oil.
The US administration has decided to sanction the Chinese firm Shandong Shouguang Luqing Petrochemical for purchasing oil from Iran, which breaches American regulations.
According to "The Moscow Times," the company from Shandong Province acquired millions of barrels of oil valued at approximately $500 million. The oil was transported by ships from the so-called shadow fleet, which also received sanctions for supporting Yemen's Houthis, designated a terrorist organization by the USA.
Sanctions and impact on Russia
The sanctions on the Chinese company might 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 had been actively purchasing Russian oil, the flow diminished after the Joe Biden administration introduced sanctions in January 2025.
The US government has imposed new restrictions on tankers delivering Iranian oil to China, also targeting the Iranian oil minister. This initiative is part of the "maximum pressure" policy aimed at curbing Iran's nuclear threat and 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, increasing transportation costs by 50 percent. Chinese ports are refusing entry to sanctioned tankers, compelling traders to resort to risky methods to sidestep restrictions. Nonetheless, China does not intend to halt importing Iranian oil, which is offered at significant discounts.
Iran is grappling with a limited number of tankers, making it challenging to fulfill oil delivery contracts to China. In 2024, Iran utilized 150 tankers, over 100 of which were sanctioned. Exports dropped to 1.5 million barrels per day, and by May, could decrease by one-third.
Russia, Iran, and Venezuela are vying for the available tankers, complicating Iran's efforts to sell oil. The global fleet of tankers has diminished, and many lack confirmed insurance. The average age of the sanctioned ships is 21 years, yet this does not deter some African companies from using them.
