Washington has extended a waiver for companies to wind down their transactions with Cosco Shipping Tanker (Dalian), one of the main subsidiaries of state tanker giant Cosco Shipping Energy Transportation (CSET).
The lengthened reprieve will now last until 4 February 2020.
The waiver, which had been due to expire on Friday, would allow Cosco Dalian to continue its dealings with existing counterparties and banks to facilitate the associated transactions.
Underscoring the scope of waiver, the US Treasury Department's Office of Foreign Assets Control (Ofac) stated it would not expect “the intermediary US financial institution to conduct additional due diligence beyond the information collected in the ordinary course of processing such transactions”. Ofac is the key sanctions enforcement agency.
The extension come as China and the US has made significant progress in their prolonged trade talks, with both sides vowing to sign a so-called phase-one deal in January.
CSET’s relief has apparently been well expected by stock investors, with its share price up 6.7% in Hong Kong and 11.3% in Shanghai from levels seen a month ago.
Cosco Dalian, which accounted 39% of CEST’s net profits in the firs thalf of the year, according Huatai Research’s estimates, owns 26 VLCCs, eight panamaxes, three suezmaxes, three aframaxes and three smaller tankers.
When the US put the company on the sanctions list in late September for allegedly shipping Iranian oil, the removal of its tonnage created major disruptions to the tanker market, eventually contributing to a spike of spot VLCC earnings above $300,000 per day on 11 October.
However, the tonnage supply crunch has partially eased since Ofac granted the previous waiver to Cosco Dalian and its counterparties to wind down their dealings on 24 October.
