Key Chinese Ports Ban Oil Tankers Sanctioned by the U.S.

Shandong Port Group, operator of key oil ports used by China’s independent refiners, has prohibited access and services to tankers sanctioned by the U.S. Treasury, a move that could curb Chinese oil imports and raise costs for local refiners, trade sources have told Reuters.

Shandong Port Group has issued a notice, seen by the trade sources, banning ports from allowing tankers on the U.S. Treasury’s designated list to dock, unload, or use ship services. The ports where the ban is in effect include Qingdao, Rizhao, and Yantai on China’s east coast, which are key import sources of crude for the so-called teapots, the independent Chinese refiners.

These refiners are the major buyers of Iranian crude oil and the ban on vessels designated by the U.S. could reduce the cheap supply of crude to the teapots.

The ban comes after the United States in October began ratcheting up sanctions on entities and vessels transporting Iranian oil.

Since then, the Treasury has sanctioned a number of entities, persons, and vessels engaged in the Iranian petroleum trade.

Last month, the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned a dozen individuals and entities based in multiple jurisdictions, for their roles in trafficking arms, laundering money, and shipping illicit Iranian petroleum for the benefit of the Houthis.

The tightened sanctions on vessels shipping Iranian crude and petroleum products have slowed purchases at China’s refiners – Iran’s main oil customers – who now demand oil delivered with non-sanctioned vessels.

Incoming U.S. President Donald Trump is widely expected to further tighten the screws on Iran’s oil exports.

Meanwhile, the current Administration plans to target Russian oil – another major cheap source of crude supply to China.

The Biden Administration is set to slap more sanctions on Russia’s oil exports by targeting tankers hauling Russian crude and products, sources familiar with the outgoing administration’s plans have Reuters earlier this week.

By Tsvetana Paraskova for Oilprice.com

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