A Kenya government official says the country is cancelling a deal to import Iranian oil hours after the U.S. directly warned the country that it risked being penalized if it sees through the deal which would breach U.S. and European union sanctions.

The sanctions are meant to deprive funding for the Iranian government and what is believed to be an effort by Iran to build nuclear weapons.

Kenya's Energy Permanent Secretary Patrick Nyoike said Wednesday that 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.

He said the memorandum would be "terminated," though he said he was not aware of the warnings by the U.S. on Wednesday.

Kenya's energy permanent secretary was quoted this week saying that Kenya has signed an agreement to buy millions of barrels of Iranian oil.