US blacklist pushes once-powerful Chinese state oil trader deeper into the shadows
- Used by Beijing to buy oil from Iran, Zhuhai Zhenrong was first penalised in 2012, and this week was placed on sanctions blacklist for trading in Iranian crude
- US Secretary of State Mike Pompeo made the announcement that has cut the company off from the US-dollar-dominated financial system
A once mighty state-owned Chinese oil company has faded deep into the shadows after struggling under American sanctions for the last seven years, in a chilling sign to other trading firms about the perils of being caught by the long-arm jurisdiction of the United States.
Zhuhai Zhenrong was used by Beijing to buy oil from Iran, but US Secretary of State Mike Pompeo announced on Monday that it was adding the company to its sanctions blacklist for trading in Iranian crude. The company was previously penalised in 2012 by the Obama administration for its dealings with Iran.
Under the US sanctions, Zhuhai Zhenrong has been cut off from the US-dollar-dominated financial system and is unable to settle invoices with shipping companies, insurance companies and other partners in US dollars. This has removed any chance of the firm moving into other businesses which do not involve importing Iranian oil.
While China has seen its crude imports nearly double since 2012, Zhuhai Zhenrong’s role in the country’s oil landscape has diminished and now appears to have become a ghostly shell. The company website is no longer accessible, there is no clear shareholding structure and no disclosed information about business or financial performance.
A source close to Zhuhai Zhenrong told the South China Morning Post that the company still exists because it remains “a tool for China to maintain its relationship with Iran”.