Kenya is cancelling an agreement to import 4 million tonnes of Iranian crude oil per year because of international sanctions against Iran, its top energy official said on Wednesday.
Kenya's move earlier this week to turn to Iran for up to 80 000 barrels of oil per day had surprised Western powers. Kenya is a key strategic ally in the U.S.-led fight against militant Islam in east Africa.
Britain earlier on Wednesday urged Kenya to reconsider the move at a time the international community is increasing pressure on Tehran over its disputed nuclear programme.
"We signed an MoU (memorandum of understanding), but it is being cancelled," Patrick Nyoike, permanent secretary in the energy ministry told Reuters.
"There is an embargo on Iranian oil. We don't want to get involved in the intricacies of international inter-governmental issues," he said.
The deal with Iran, signed last month, raised eyebrows at a time many importers of Iranian crude oil have sharply reduced purchases to earn exemptions from U.S. financial sanctions.
European sanctions, including a ban on imports of Iranian oil by EU states and measures that make it difficult for other countries to trade with Iran, came into effect on Sunday.
"Kenya should consider carefully whether its plans will fall foul or undermine these measures," a British Foreign Office spokesman told Reuters.
Nyoike said east Africa's biggest economy had imported oil from Iran in the 1970s and 1980s but not since then.
The U.S. State Department said Washington was aware of the reports on Kenya's intentions and that the United States in discussions with all international partners had made clear the importance of reducing ties with the Central Bank of Iran and revenue to Iran.
"We are implementing our sanctions fully," the U.S. statement said.
Under President Mwai Kibaki, Kenya has increasingly turned to new economic partners, forging close ties with nations including China and Libya under Muammar Gaddafi's leadership.
The shift in foreign policy stance has sometimes caused unease among its traditional western allies.