Trump’s Iran Sanctions Hit 3 Ships Involved In China Trade

President Donald Trump’s first sanctions against Iran have targeted 3 vessels carrying Iranian crude to China.

The sanctions have affected one very-large crude carrier (VLCC) and two Aframaxes that the Treasury Department said helped move Iranian oil to China.

They also targeted several entities and individuals across different countries involved in the trade, on behalf of Tehran’s Armed Forces General Staff and its sanctioned front company, Sepehr Energy Jahan Nama Pars.

Last year, Trump pledged in his Republican National Convention speech to reduce Iranian oil exports. He said he had previously achieved this objective by linking it to trade; “I told China and other countries, if you buy from Iran, we will not let you do any business in this country and we will put tariffs on every product you do send in of 100% or more.” According to StanChart, Iranian oil is likely to play a key role in Trump’s wider China trade policy agenda.

“A Trump victory may see the United States enforce sanctions against Iran, thereby reducing Iranian oil exports and prompting oil prices higher,” Vivek Dhar, a commodities strategist at Commonwealth Bank of Australia, said in a note.

China has been importing Iranian oil indirectly via proxies. According to StanChart, crude oil imports from Malaysia clocked in at 1.456 million barrels per day (mb/d) in June, the second-highest monthly average on record. The commodity experts pointed out that Malaysia’s crude oil output is about 0.35 mb/d while exports usually average 0.2 mb/d, implying that the vast majority of the oil that China imports from Malaysia was not produced in the country. According to multiple media sources, the transfers involve a dark fleet consisting of a group of aging tankers that rarely have an identifiable insurer. These transfers can be hazardous, including the danger of spills and collisions, with so many low-quality tankers massed in a narrow trade route with their transponders off. For instance, two such vessels caught fire off Singapore after a collision in July.