Kenya has cancelled an oil deal with Iran after being warned of sanctions by the United States.

According to Associated Press Kenya has announced that it will not sign an oil agreement with Iran because after examination of the deal is had been determined that it would be in violation of US and EU sanctions and could lead to punitive actions against Kenya.

Patrick Nyoike Kenya’s Energy Permanent Secretary said on Wednesday that no agreement had been signed with Iran and the deal was only at the level of a memorandum of understanding(M.O.U).

Nyoike was quoted as saying: “There is an embargo on Iranian oil and on that note it has been decided that the M.O.U. will be terminated.”

Earlier Nyoike had been quoted as saying that Kenya had signed a deal with Iran to buy millions of barrels of Iranian crude.

The United States announced last December that countries and companies buying Iranian oil will face US punitive measures starting June of this year.

The European Union has also imposed sanctions on Iranian oil exports which includes providing insurance for Iranian crude shipments.

Nyoike said however that the cancellation of the agreement was not linked to the recent arrest of two Iranians in Kenya suspected of being involved in terrorists operations against Israeli and US interests.

The two Iranians are currently in custody in Kenya and Iranian foreign ministry has announced that they are not aware of the identities of the two detainees and are trying to investigate the matter.