Kenya on Wednesday cancelled a deal to import Iranian oil hours after the U.S. warned the country that it risked being penalized if it sees through the deal which would breach U.S. and European union sanctions, a government official said.

Kenya’s Energy Permanent Secretary Patrick Nyoike said Kenya had not signed an agreement but had a memorandum of understanding with Iran to import its oil and was complying with international sanctions on Iran.

“There is an embargo on Iranian oil and on that note it has been decided that the M.O.U. will be terminated,” Nyoike said.