Full Breakdown
China Blocks U.S. Sanctions on Five Refineries Linked to Iranian Oil
5/3/2026, 9:25:50 AM
Event
On 2 May 2026 MOFCOM issued a blocking order barring compliance with U.S. sanctions on five refiners accused of Iranian petroleum transactions. Effective immediately, the order cites China’s Anti-Foreign Sanctions Law and the 2021 Blocking Rules.
Background
United States has used sanctions since 2019 to curb Iran’s oil revenue. In April 2026 Treasury placed Hengli Petrochemical (Dalian) Refinery on the SDN list, alleging purchases. Four other refiners were sanctioned in 2025, and 40 shipping firms linked to a “shadow fleet” were listed. Washington says measures pressure Tehran.
Entities
The order lists Hengli Petrochemical (Dalian) Refining; Shandong Shouguang Luqing Petrochemical; Shandong Jincheng Petrochemical Group; Hebei Xinhai Chemical Group; and Shandong Shengxing Chemical. Hengli’s 400,000-bpd complex is refinery singled out. China imported 1.8 million bpd of Iranian crude in March 2026. U.S. sanctions name Qingdao Haiye Oil Terminal for importing “tens of millions of barrels” of Iranian oil; absent from MOFCOM order.
Official
MOFCOM said the U.S. measures “improperly prohibit or restrict economic and trade activities” and breach international law, noting injunction does not affect China’s obligations. Treasury called the sanctions a “financial stronghold on the Iranian regime” aimed at its nuclear program. State Department called the action “decisive” against Iran’s illicit oil trade that funds terrorism and destabilisation.
Opposition
U.S. officials argue the firms evade sanctions through ship-to-ship transfers, weakening sanctions impact. Treasury warning letters to Chinese banks stress intermediaries enable prohibited transactions, framing the measures as lawful enforcement of U.S. policy.
Gaps
Sources differ on sanction timing: some cite 2025 for four firms, others describe a 2026 action covering five. U.S. list includes Qingdao Haiye Oil Terminal, which the MOFCOM order omits. Reported purchase volumes range from “billions of dollars” to “tens of millions of barrels.”
Implications
The injunction pits Beijing’s framework against Washington’s secondary-sanctions regime, raising the chance of steps before Trump-Xi summit. By shielding the refiners, China seeks to preserve its position as world’s largest oil importer; U.S. aims to cut Iran’s revenue. Dispute could affect oil prices, Strait of Hormuz traffic, and U.S.–China competition.
Quotes
- “Economic Fury is imposing a financial stronghold on the Iranian regime, hampering its aggression in the Middle East, and helping to curtail its nuclear ambitions.” — Scott Bessent, U.S. Treasury Secretary
- “The United States is taking decisive action to disrupt Iran’s illicit oil trade, the Iranian regime’s primary revenue streams that fund terrorism and regional destabilisation.” — U.S. State Department statement
- “Such actions violate international law and basic norms governing international relations.” — MOFCOM spokesperson
- “China opposes unilateral sanctions and long-arm jurisdiction that have no foundation in international law.” — Liu Pengyu, Chinese Embassy spokesperson
