China signaled an intention to defy U.S. sanctions on Iran’s oil industry on Tuesday, denouncing the loss of a waiver renewal as an unacceptable threat against “normal energy cooperation” with Tehran.
“The normal energy cooperation under the international law between Iran and other members of the international community, China included, is legitimate and lawful; thus it must be respected and protected,” Chinese Foreign Ministry spokesman Geng Shuang told reporters.
President Trump moved to tighten the squeeze on Iran on Monday by announcing the administration would not renew any waivers from sanctions that punish purchasers of Iranian oil. That decision puts China, Iran’s largest oil customer and a current beneficiary of U.S. waivers, in the crosshairs of the administration’s pressure campaign.
“The goal remains simple: to deprive the outlaw regime of the funds it has used to destabilize the Middle East for four decades, and incentivize Iran to behave like a normal country,” Pompeo said Monday. “We have made our demands very clear to the ayatollah and his cronies. End your pursuit of nuclear weapons. Stop testing and proliferating ballistic missiles. Stop sponsoring and committing terrorism. Halt the arbitrary detention of U.S. citizens.”
The waivers expire on May 2, at which point companies that buy Iranian oil could be blacklisted by the Treasury Department. China protested the sanctions as an example of Trump trying to dictate international policy toward Iran, backed by the muscle of the U.S. financial system.
“China firmly opposes the unilateral sanctions and so-called ‘long-arm jurisdictions’ imposed by the U.S.,” Geng said. “We urge the U.S. to earnestly respect China's interests and concerns, and refrain from taking wrong moves that will undermine our interests. We will continue to uphold the lawful and legitimate rights and interests of Chinese businesses.”
Trump decided to scrap the waivers in part due to pressure from Iran hawks, despite internal concern that the U.S. effort to exclude Iran from world oil markets would cause gas prices to spike.
“There is a lot of risk attached to this decision,” Richard Nephew, an energy sanctions expert who served at the State Department during former President Barack Obama’s tenure, told the Washington Examiner. "There's a pretty big chunk of oil that is just going to be gone.”
U.S. officials believe that Gulf Arab states hostile to Iran will pump extra oil to offset the loss of Iranian supplies.
“Both the Kingdom of Saudi Arabia and the United Arab Emirates have assured us they will ensure an appropriate supply for the markets,” Pompeo said. “And of course, the United States is now a significant producer as well. I can confirm that each of those suppliers are working directly with Iran’s former customers to make the transition away from Iranian crude less disruptive.”
Those efforts won’t be sufficient, China argued. “What the U.S. did will inevitably add more instabilities in the Middle East and the global energy market,” Geng said. “We urge the U.S. to act in a responsible manner and play a constructive role instead of doing the opposite.”