A Very Large Crude Carrier heading for the Chinese port of Rizhao has been diverted to another port, after the U.S. Treasury imposed sanctions on the Rizhao oil terminal as part of a new pressure campaign on China for its purchases of Iranian crude.
Washington announced the new sanctions at the end of last week, targeting more than 100 individuals, tankers, and an independent refiner, along with the Rizhao Shihua Crude Oil Terminal.
“The Treasury Department is degrading Iran’s cash flow by dismantling key elements of Iran’s energy export machine,” Treasury Secretary Scott Bessent said. President Trump, on the other hand, said that Tehran had signaled it was in favor of the ceasefire deal brokered by him between the Netanyahu government and Hamas, and signaled willingness to work with the Iranian government, within limits.
“We’d like to see them be able to rebuild their country too, but they can’t have a nuclear weapon,” Trump said, as quoted by Reuters.
Meanwhile, the latest sanctions are seen affecting state oil major Sinopec, which receives 20% of its crude oil exports at the Rizhao Shihua Crude Oil Terminal, Reuters reported separately. The oil major owns 50% of the facility and handles most of the incoming crude oil flows at the terminal.
The U.S. sanction move followed China’s tightening export controls on rare earths that angered Washington and reversed a slide in oil prices that saw Brent crude and West Texas Intermediate end the week to October 10 with a loss. Trump’s immediate response to the new controls was the announcement of new tariffs of 100% on top of previously implemented import levies. The U.S. president also said the U.S. will be announcing export controls on “any and all critical software”, CNBC reported.
China argues the new export controls are not punitive action against the U.S. but a regulatory push. Per the new rules, foreign companies exporting rare earths from China would have to apply for a license to do so. Companies linked to foreign armies will not be granted such licenses, the Chinese trade ministry said.
Source: By Charles Kennedy from Oilprice.com