The US will continue to target Chinese entities purchasing oil from Iran, as Washington looks to exert “maximum pressure” to squeeze Tehran's exports off the market.
"Certain individuals and certain companies have already been designated. There’s already been certain designations by the US Department of Treasury and if there are additional activities that the Chinese engage in then there will be strong considerations given to additional designations,” US deputy energy secretary Dan Brouillette told reporters in Abu Dhabi.
Since walking away from the Joint Comprehensive Plan of Action signed by the P5+1 countries last year, the US has looked to drive Iran’s oil exports to zero. The administration imposed sanctions on Iran, restricting its ability to sell its oil and condensate in November last year. In May this year, it increased the pressure on Tehran, cancelling waivers that had been granted to eight of Iran's most significant oil buyers.
Beijing, one of Iran's top purchasers, has continued to trade with Iran, including allowing the country to park its crude in bonded storage in China. While exact figures are unclear, state-owned National Iranian Oil Company dispatched tankers with a collective capacity of over 20 million barrels to offload their cargo in China's bonded storage tanks in July, according to data from Bloomberg.
Iran does not consider these transfers to be exports, as the storage is still considered to be its property and is not in breach of sanctions. However, China’s accommodation of Iranian barrels has come under fire during the ratcheting up of trade tensions with the US. Washington could place pressure on Beijing during upcoming trade talks to give up its relationship with Iran in exchange for trade concessions.
Meanwhile, Mr Brouillette said Washington’s "maximum pressure” approach, which has targeted Iran’s shipping network has borne fruit.
"I think the maximum pressure campaign is going to continue, to be honest, I think some of the latest activities that we’ve seen, some of the latest announcements we’ve seen with regards to R&D and some of the centrifuge activities are going to create some level of concern in our government,” he said.
"This behaviour has got to stop,” he added.
He also ruled out any possibility of seeking waivers for Chinese tariffs on US crude, which came into effect this month, saying the US had alternative buyers in South Korea, Japan and Mexico. Sales of liquefied natural gas, for which China is the world’s largest buyer, also have greater uptake among other buyers, Mr Brouillette said.
The US, the world’s largest producer of oil, is expected to see its production surge to 13 million barrels per day by the end of 2019 and will climb as high as 13.5 million barrels per day by 2020, the deputy secretary added.
