Sanctioning a Chinese refinery for buying Iranian oil is the first real sign of President Donald Trump’s “maximum pressure” on Tehran, the Wall Street Journal’s Editorial Board said on Sunday.
On March 20, the United States sanctioned Shandong Shouguang Luqing Petrochemical Co, which is known as a “teapot refinery” purchasing Iranian oil shipped by illicit methods to China in violation of US sanctions.
The WSJ said that after years of a lenient approach toward Tehran’s oil exports to China, the Trump administration finally took a step targeting the main source of Iran’s oil revenues. Chinese teapot refineries buy 90% of these exports and provide a lifeline for Tehran, which is financially strapped.
Officially, China buys almost no Iranian oil but its small refineries, not directly linked to government enterprises, unload tankers that wholly or partially carry Iranian cargoes.
“Unlike larger firms with links across the global economy, the teapots are less vulnerable to sanctions. But they tend to have links across the domestic Chinese economy. That’s what makes this move a warning to China,” the editorial said. It added that while Beijing might be willing to tolerate risk with its small refineries, it might not be ready to endanger US punitive measures against its bigger, state enterprises.
“If that’s trouble Mr. Xi could do without, he can make the business and political decision to drop Iran as a supplier. When Iran’s oil exports collapse, you’ll know the regime is feeling the heat. That’s when nuclear talks will have their best chance of success.”
President Trump last month announced the revival of his so-called maximum pressure policy toward the Islamic Republic, demanding talks to dismantle its nuclear program. Iran has responded by saying that it will not negotiate under Mr. Trump’s pressure, although it is facing serious financial pressures to a large extent brought on by US sanctions.
