The United States has partially lifted its sanctions imposed on Chinese shipping giant Cosco. The US Treasury Department announced on Friday that it has removed one of the two units of Cosco from its trade blacklist.
Cosco's two units, Cosco Shipping Tanker (Dalian) Co and Cosco Shipping Tanker (Dalian) Seaman & Ship Management Co were placed on the United States' trade blacklist back on September 25 last year.
The inclusion of the two companies was the country's way of punishment for their participation in the transportation of Iranian oil. The imposition of the sanctions immediately resulted in the surge of worldwide freight costs to new highs, effectively disrupting the global shipping market.
Cosco itself has a fleet of more than 1,000 ships throughout its various subsidiaries, while its Dalia Cosco unit only has around 40 tankers. Following the inclusion of the two units in its trade blacklist, Treasury officials still managed to issue waivers to select US companies that allowed them to continue doing business with the blacklisted firms.
The US Treasury Department stated that it has removed Cosco Shipping Tanker (Dalian) Co from its sanctions list, but Cosco's other unit will still remain. The move was reportedly initiated after top Chinese officials had brought up the issue during the recently restarted China-US trade talks.
According to sources familiar with the negotiations, the topic was brought up during one of the talks earlier in January. This was prior to the signing of the Phase one trade deal between both nations. Analysts have pointed out that the US likely left one of the units in its sanctions list as leverage for future negotiations with China.
Despite the Trump administration's unilateral sanctions against Iran and countries that continue to buy oil from the nation, China still continued to import oil from Tehran. Even after the US re-imposed its sanctions on Iran's oil exports, China still continued to be one of the major importers of Iranian oil.
The US aimed to cut off Iran's funding sources by forcing its oil buyers to boycott its products. The Trump administration hoped that by cutting its oil revenues, the country would no longer be able to fund its missile and nuclear programs.
Last year, China imported a total of 14.77 million tons of oil from Iran. That equates to around 295,400 barrels per day. While the amount is still significant, it is actually only half of the volume of what China had imported in 2018. According to reports, the majority of the imported Iranian oil went directly into government stockpiles.
