The US has imposed sanctions on China for the first time for violating the oil embargo, which could have far-reaching implications for Russian oil supplies. The decision was made by the US Treasury Department's Office of Foreign Assets Control (OFAC) and concerns the Chinese refinery Shandong Shouguang Luqing Petrochemical, which has been purchasing Iranian oil in violation of international restrictions.

The Trump administration has imposed restrictions on the refinery, marking the first time the US has imposed sanctions on China for its cooperation with Iran in the energy sector. According to the US Treasury Department, Shandong Shouguang Luqing purchased millions of barrels of Iranian oil worth about $500 million. The oil was supplied by shadowy fleet vessels, some of which are already under sanctions for their ties to the Houthis in Yemen.

This Iranian oil was not only subject to sanctions, but also had links to Iranian military structures, in particular the Islamic Revolutionary Guard Corps, which adds another component to the international tension. In addition, the head of the Chinese company was also subject to sanctions.

However, the consequences of these sanctions could be much wider, as restrictions could also affect Russian oil supplies. Shandong province, where the Shandong Shouguang Luqing Petrochemical plant is located, is an important oil refining center for private Chinese companies that previously actively purchased Russian oil.

Although Russian oil supplies to Shandong have decreased since the imposition of sanctions by the Joe Biden administration in January 2023, it is not yet clear whether this company has purchased Russian oil recently. The company is known to have received Russian oil tankers during the COVID-19 pandemic, which further complicates the situation.

Additionally, the US has sanctioned eight shadow fleet vessels and four owner companies registered in Hong Kong, Liberia and China. These vessels, flying the flags of Panama, San Marino, Barbados and the Comoros, were involved in transporting oil in circumvention of sanctions.