The United States is looking to close all loopholes Iran is using to sell its oil to China and warned Hong Kong-based banks last month against facilitating Iranian oil sales to Chinese buyers, Bloomberg reported on Friday, citing unnamed sources with knowledge of the development.
In early April, a delegation from the U.S. Department of the Treasury visited Hong Kong, met with bankers in the city, and warned them against allowing Iran to use their services to facilitate payments in the Iran-China oil trade.
The U.S. Treasury officials asked the banks to do thorough due diligence to uncover the ultimate owners of front companies and flag transactions in currencies other than U.S. dollars that they consider suspicious, Bloomberg’s sources said.
Since U.S. President Donald Trump restored his “maximum pressure campaign” on Iran, the U.S. Treasury and State Department have been tightening the screws on all aspects of Iranian oil exports, targeting Chinese independent refiners that import oil from the Islamic Republic.
The U.S. campaign has extended to entities in other jurisdictions found to have facilitated Iranian oil exports to China.
The warnings to the banks last month came ahead of the U.S. Treasury’s sanctions against several Hong Kong-based shipping operators and energy trading firms.
This week, the Treasury sanctioned an Iranian oil smuggling network allegedly responsible for funneling billions in crude oil sales to China.
In early 2024, Hong Kong-based companies Metaone Trading Limited, South Sea Energy Limited, Continental Sinoil Group Limited, Winso Trading Limited, and Singapore-based Oriental Apple Company PTE Ltd collectively took delivery of millions of barrels of Iranian oil from Sepehr Energy front Xin Rui Ji, likely as representatives of the small, independent teapot refineries based near Qingdao Port area in Shandong province, the U.S. Treasury said.
The U.S. maximum pressure campaign has already targeted independent Chinese refiners with sanctions.
By Tsvetana Paraskova for Oilprice.com
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