Last week saw the first of what is likely to be a new round of sanctions against Chinese oil companies by the US government, as the Zhuhai Zhenrong Corporation was put on the blacklist after it came to light that the company had brokered around RMB3 billion (US$500 million) in oil contracts with Iran over a six-month period. This came not only as the US is stepping up sanctions against countries and companies doing business with Iran, but as Chinese Premier Wen Jiabao paid a state visit to Saudi Arabia and several other oil-producing nations in the middle east to discuss matters of trade. Is this a sign that an era of resource conflict between the US is emerging?

While it is true that the US is stepping up sanctions against Iran and the US Secretary of the Treasury Timothy Geithner recently visited Beijing to discuss the possibility of gaining Chinese support for the sanctions, the sanctions against Zhuhai Zhenrong seem less targeted at Iran than at China, and Chinese officials have expressed displeasure with the move.

“We express strong dissatisfaction and firm opposition to this,” said foreign ministry spokesman Liu Weimin in a recent statement to the Xinhua news agency. “Like many other countries, China maintains normal cooperation with Iran in energy, economic and trade fields. This is without reason, and against the content and spirit of resolutions by the United Nations Security Council on the Iran nuclear issue.”

While the statement may read of typical diplomatic boilerplate, it does convey the message that the US may be attempting to use a conflict with Iran as a geopolitical pretext to block China’s expansion in South Asia and the Middle East.

The US government is currently attempting to penalize foreign financial entities that deal with Iran’s central bank by barring them from US financial markets, in the hopes that this will reduce the earnings Iran derives from oil exports. However, nations demonstrating a significant reduction in oil imports from Iran can receive a special exemption. So far, the EU and Japan have both signed on to the embargo, but China has remained reticent, as Iranian oil imports – nearly 600,000 barrels per day - make up a significant energy source for the nation, and an embargo could lead to shortages and dramatic price increases. Shirking the embargo, however, could be even more disastrous, as it could lead to China’s major banks being cut off from US markets.

To make up for the potential loss of Iranian oil supplies, Premier Wen is visiting several nations in the middle east this week, including Saudi Arabia, the UAE and Qatar. While Wen’s intentions on this trip are unknown, it seems likely that securing additional supplies of oil is high on his agenda.