China skirts sanctions on Iran oil

China is receiving oil shipments from a larger number of Iranian tankers than was previously known, defying sanctions imposed by the United States to choke off Tehran’s main source of income, an investigation by The New York Times has found.

The Times examined the movements of more than 70 Iranian tankers since May 2, when the U.S. sanctions took full effect.

Twelve of the tankers loaded oil after May 2 and delivered it to China or the Eastern Mediterranean, where the buyers may have included Syria or Turkey. Only some of those 12 tankers were previously known to have recently delivered Iranian oil, and an analyst said the scale of the shipments documented by The Times investigation is greater than what had been publicly known.

The continued flow of oil underscores the difficulty President Donald Trump’s administration has had in using sanctions to send Iranian oil exports to zero after breaking with allies and partners on Iran policy. President Barack Obama’s administration had worked with China, Russia and three European allies on the 2015 agreement intended to restrict Iran’s ability to pursue a nuclear program. Trump’s decision to withdraw from the deal and to impose sanctions was opposed by those countries.

“You can’t make these kinds of threats if you can’t operationalize it,” said Richard Nephew, a scholar at Columbia University and a former White House and State Department official who helped enforce Iran sanctions during the Obama administration.

“It adds up to a decision that makes them look weak and feckless,” he added. “That shows there are limitations to U.S. power. China and other places are prepared to say, ‘No, we’re not going to follow the U.S. lead.’”

The Times reviewed data from MarineTraffic and Refinitiv, two ship-tracking services, as well as satellite imagery from Planet Labs and analysis from shipping and energy experts.

“U.S. sanctions have not stopped Iran from moving oil to the Mediterranean and Asia,” said Noam Raydan, an analyst at ClipperData, which tracks global crude shipments.

It is not illegal under international law to buy and haul Iranian oil or related products. The Trump administration’s oil sanctions, which mainly went into effect in November after the United States pulled out of the Iran nuclear agreement, are unilateral. The administration granted eight governments permission to continue buying Iranian oil despite the sanctions, but it ended the exceptions May 2.

Foreign companies that ignore the sanctions and do business with U.S. companies or banks risk being punished by the United States.

U.S. officials have said sanctions are aimed at cutting off money to the Iranian government to force leaders there to make political change, transform their foreign policy and offer more concessions on the country’s nuclear and missile programs.

While Iran continues to export oil, the sanctions have had a substantial effect. In April 2018, before Trump withdrew from the nuclear deal, Iran exported 2.5 million barrels of oil per day. One year later, that figure was at 1 million. And in June, after the end of the exceptions or waivers, ships in Iranian ports loaded about 500,000 barrels per day, according to Reid I’Anson, an energy economist at Kpler, a London-based company tracking seaborne commodities.

Since the sanctions fully took effect May 2, low-level hostilities between Iran and the United States in the Persian Gulf have increased, despite attempts by European nations to ramp down tensions and get Iran to comply with the nuclear deal, which it had been doing until it breached limits on nuclear fuel last month.

Japan and South Korea, fearful of secondary sanctions imposed by Washington if they do business with Iran, have complied with the sanctions. Turkish officials said in late May that they were halting imports of Iranian oil but do not agree with the U.S. sanctions.

In July, the British marines and port authorities in Gibraltar seized a supertanker that they said was carrying crude oil from Iran to Syria. Though the Europeans do not endorse the U.S. sanctions on Iran, the shipment violated European Union sanctions against Syria.

The Trump administration is starting to intensify sanctions enforcement to try to end the exports to China, which continues to be the largest buyer of Iranian oil. On July 22, Secretary of State Mike Pompeo announced sanctions against Zhuhai Zhenrong, a Chinese stateowned enterprise, and its top executive, Li Youmin, for “violating U.S. restrictions on Iran’s oil sector.”

A Chinese Foreign Ministry spokesman, Geng Shuang, said on July 19 that the Trump administration’s “maximum pressure” campaign against Tehran was the “root cause of the current tensions” involving Iran and that Washington should “correct its wrongdoing.”

Before the end of the sanctions exception, China had been importing 500,000 barrels per day of Iranian oil. In the past month, China’s imports have dropped to about 360,000 barrels per day, according to Kpler.

Some countries watching the continuing imports of Iranian oil by China might start pressuring the Trump administration to grant them exceptions, Nephew said. Or they might decide to just go ahead and buy the oil, perhaps in secret. In June, after a meeting with Prime Minister Shinzo Abe of Japan, President Hassan Rouhani of Iran said Abe told him that “Japan was interested in continuing to buy Iran’s oil.”