US Sanctions Chinese Shipping Firms, Including a Division of State-Owned Giant COSCO
The sanctioned firms will now orient to hauling Iranian oil exclusively, and Beijing will grow more convinced the US is a hostile power
Oil-tanker costs are surging after the US slapped sanctions on Chinese companies it accused of hauling Iranian crude, prompting a scramble in freight markets to secure alternative vessels.
Rates for ships hauling two million-barrel cargoes of Middle East oil to Asia jumped 19 per cent on Friday (Sept 27), according to data from the Baltic Exchange in London. Shares of tanker operators also gained. The cost to transport US crude to Asia on supertankers rose 6.3 per cent to US$8.5 million on Thursday, according to people with knowledge of the situation.
“There’s a lot of panic out there,” said Halvor Ellefsen, a tanker broker at Fearnleys in London. “Modern vessels are available, but just hard to get.”
The list of sanctioned Chinese companies includes a unit of Cosco Shipping Corp, which operates the world’s second-largest tanker fleet. The penalties bar US citizens and companies from dealing with the sanctioned entities, effectively blocking them from American banks at the heart of the global financial system. As a consequence, oil traders spent the day canceling bookings and letting provisional charters lapse.
Tankers rates from the Middle East to China were 75.13 Worldscale points, the Baltic Exchange said on Thursday. The same rate was at 63.38 on Wednesday. Worldscale is an industry standard that allows traders to easily calculate costs and returns from thousands of different tanker routes. Shares of Frontline Ltd advanced 7.5 per cent in Oslo while Euronav NV gained 8.1 per cent in Antwerp.
Rates were already rallying after attacks on Saudi oil installations earlier this month obliged traders to seek alternative cargoes, particularly from suppliers in the US and elsewhere in the Atlantic Basin.
“This certainly gives a slight premium to non-Chinese VLCCs (very large crude carriers),” said Randy Giveans, an analyst at Jefferies LLC in Houston. Rates were already being boosted for multiple reasons including the Saudi attacks, ships getting refitted for new sulfur-emission rules, and importer nations building stockpiles, he said.
The sanctioned Cosco unit, Cosco Shipping Tanker (Dalian) Co, operates 26 supertankers capable of hauling a combined 52 million barrels of oil, according to data from Clarkson Research Services Ltd. Its parent company is not affected by the sanctions, the US Treasury said.
China opposes the penalties against its companies and citizens and has consistently disagreed with the US imposing unilateral sanctions, Geng Shuang, a foreign ministry spokesman, said at a media briefing.
“Western charterers may avoid all those Cosco VLCCs, but China Inc is still the largest importer of crude oil, so domestically alone there could be usage of those vessels,” said Jon Chappell, an analyst at Evercore ISI in New York. “Longer term it’s hard to see how it has a sustainable impact unless the ships are banned from global trading.”
That’s good. Washington is desperate and makes stupid moves. This will promote use of petroyuan and reduce petrodollar.
The US can sustain these sanctions for a limited time – until its economy is stressed (which actually it already has been) and Wall Street goes bezerk. But deep in the heartland, the farmers are suffering – and thus, the whole agricultural economy in the Midwest….and it goes deeper, with transportation cut by a huge percentage and so on and so on down the line…affecting the United States as a whole….Sanctions are not relief from being on the losing end of the trade wars that the US itself started…as soon the world will see. Americans see and feel it already. China, in the meantime, steams ahead with its Belt and Road as well as its bustling internal economy….not seeming to be hindered by Washington imposed sanctions at all….it has backfired on Washington and they just won’t admit it..
I wouldn’t underestimate a wounded animal. Washington will continue to destabilize Mideast and it will affect New Silk Road.
A strategy that might require a Chinese naval escort along its path to Chinese ports.
The Chinese might consider dumping a percentage of their sizable US Treasury portfolio to finance more domestic oil refinery and storage tank infrastructure. I sense their Iran oil imports might see a significant increase over normal flows.
To purchase those materials from American companies would of course be discretionary. Might have mixed political and strategic ramifications for President Trump.
Many countries haven’t totally de-dollarized, so their lies other options.
To protect that infrastructure, they may be inclined to add Russia’s Pantsir, Buk-2, and Krasukha anti-missile and anti-drone electronic jamming systems.
Per these weapons systems, I think we can assume they won’t be sold to Israel. Iran might require them around their facilities other than the S-400s. I believe the Iranians are less concerned with US attacks on Iran’s oil infrastructure as that’s national suicide for a country (US) with few oil resources amidst an imminent, presumed fiscal policy of USD hyperinflation.
The betting concerns from Israel’s missile launches into Iran. The record states that Israel imports no oil from Iran or Saudi Arabia.
It may soon become Russian defense and economic policy to not provide these systems to countries that export oil to Israel. When the fan is hit, one could make a case their refineries and storage tasks will be annihilated.
The popcorn moment is near.
IDK. It seems to me PRC still hope US will pay it’s debts but at least they aren’t as naive as Kremlin. They should wait until BRICS countries have sizable gold buffer, crush financial system and buy imperial assets as scrap.
Great idea there. Only problem being that they still refuse to engage them. What use is that? The switches need to be turned ON and somebody needs to fire at these exceptional scum. Then it might work.
This is a military, financial, and diplomatic dance in progress. Knowing the US government as you and I do, international rule of law is meaningless.
Russia, China and Iran will play it their way. A single military engagement might set off the war to end all wars.
The sooner the World accepts the US writes the Rules for the World, the easier it will be to follow.
I was being sarcastic,if you missed it.
Your rules don’t apply anywhere outside US.
The more US is misusing its power it becomes less and less singnificant… And US is misusing its power left and right…
The sooner the whole world realises how Satanic and evil this war criminal…the US, really is , the quicker it can be destroyed !
When is somebody going to fire back at these kazarz?