US slaps sanction on Chinese oil company

The US said it had imposed economic sanctions on a Chinese oil company, in an attempt to add pressure on Iran to compromise on its nuclear program. The move came after a visit by a US official aimed at lobbying Beijing to cut oil imports from Tehran proved fruitless.

The company said on Friday that the sanction was "groundless", while the Iranian embassy in China condemned the move as "irresponsible."

The US State Department announced the sanctions Thursday against Beijing-based Zhuhai Zhenrong Company, saying it was the largest supplier of refined petroleum products to Iran, according to the department's website.

The sanctions are "an important step" in maintaining pressure on Iran to "comply with its international nuclear obligations," the Department of State said in a statement.

"The accusation that we export refined oil to Iran is complete fiction. We have never done that. The sanctions are truly puzzling," Zheng Mei, a spokesperson from the company, was quoted by the Beijing-based Legal Mirror as saying on Friday.

The Chinese Ministry of Foreign Affairs was not available for comment on Friday.

The company, one of China's State-owned corporations that import crude oil, was established in 1994. By the end of 2010, the company had imported a total of 150 million tons of crude oil, mainly from Iran, according to its website.

Zheng noted that its business with Iran would not be affected and the sanctions would not have any impact as they have never conducted projects with the US. According to the US statement, the company is barred from receiving US export licenses, US Export Import Bank financing, or loans of over $10 million from US financial institutions.

The same sanctions were also imposed on Singapore's Kuo Oil Pte Ltd and FAL Oil Company Ltd based in the United Arab Emirates.

"The sanctions are an irresponsible move and directly meddle in two sovereign countries' legitimate trade rights. It is an apparent invasion to press other countries to accept its illegal political purpose," Mohammad Ali Ziaei, the spokesman of the Iranian embassy in China, told the Global Times on Friday.

Washington's move is more likely a warning to others who have negatively responded to its calls to put pressure on Iran, experts say.

"The move is a signal. First, it shows that they really are imposing sanctions on Iran. Second, it warns Beijing not to neglect its calls. Otherwise, all-round sanctions will be imposed," said Yuan Peng, director of the Institute of American Studies under the China Institutes of Contemporary International Relations.

Furthermore, as Chinese Premier Wen Jiabao prepares to visit three Middle East nations from Saturday, the US has attempted to amplify Beijing's inactive attitude against the background of the two-day visit by US Treasury Secretary Timothy Geithner this week that ended in failure on the Iran issue, Yuan noted.

Liu Weimin, a spokesman of China's foreign ministry, said on Wednesday that Chinese imports of crude oil from Iran did not go against UN resolutions and should not be intervened.

Geithner's visit to Japan seemed to yield greater success. On Thursday, Japan's finance minister Jun Azumi said the country was planning to reduce its oil imports from Iran after talks with Geithner.

In addition, European governments said recently they were moving closer to an agreement on an Iranian oil embargo that would give companies six months to phase out contracts with Tehran.

Separately, two US aircraft carriers have reportedly arrived in the Arabian Sea against the backdrop of rising tensions with Iran, with another said to be on its way.

The new sanctions would only undermine the international community's efforts to peacefully resolve the conflict, Russia's Deputy Foreign Minister Gannady Gatilov said on Friday, AFP reported.

"If more countries stand in line with the US and force Iran into a corner, the consequences would be serious. For this, China has to prepare for the worst, including withdrawing Chinese citizens from Iran," Yuan said.

However, Yin Gang, a professor of Middle East issues at the Chinese Academy of Social Sciences, downplayed the possibility of a war. "Iran's moves to confront US sanctions, such as military drills, are only aimed at seeking more weight at the negotiating table, rather than triggering a war," Yin told the Global Times on Friday.

Iranian diplomats said on Friday that the country has agreed to a high-level visit by UN nuclear inspectors, most likely on January 28, in an attempt to clear up allegations of a covert weapons program.

"Iran is awaiting other countries' final decisions, which are still unpredictable at the current stage," Ziaei said, adding that Iran is actively keeping contact with key buyers of Iran's oil.