China has issued a prohibition order to block US sanctions against Chinese refiners accused of purchasing oil from Iran.
- China’s Ministry of Commerce claims the sanctions violate international law and lack UN authorization.
- The US Treasury targets firms, including Hengli Petrochemical, for allegedly generating revenue for the Iranian military.
- Independent “teapot” refineries, which comprise 25% of China’s capacity, often rely on discounted crude from sanctioned nations.
In a statement released Saturday, China’s Ministry of Commerce asserted that the sanctions “improperly” restrict business between Chinese enterprises and third countries. The ministry stated these measures violate international law and the basic norms governing international relations.
The “prohibition order” stipulates that the US sanctions shall not be recognized, enforced, or complied with. Officials described the move as necessary to safeguard national sovereignty, security, and development interests.
Legal Conflict over US Sanctions against Chinese Refiners
The Chinese government stated it consistently opposes unilateral sanctions that lack a basis in international law or UN authorization. The order specifically blocks measures against Hengli Petrochemical (Dalian) Refinery and four other “teapot” refineries.
The other targeted firms include Shandong Jincheng Petrochemical Group, Hebei Xinhai Chemical Group, Shouguang Luqing Petrochemical, and Shandong Shengxing Chemical.
The US Treasury Department, which announced sanctions on April 24, identified Hengli as “one of Tehran’s most valued customers.” The US alleges the firm generated hundreds of millions of dollars in revenue for the Iranian military through crude oil purchases.
The Trump administration imposed sanctions on the other four refineries, among other facilities, last year. These sanctions bar the refiners from the US financial system and penalize entities doing business with them.
The Role of Teapot Refineries
China sources more than half of its oil from the Middle East, with a significant portion coming from Iran. Data from commodities firm Kpler indicates China purchased more than 80 percent of the oil Iran shipped in 2025.
The targeted “teapot” refineries operate independently and are smaller than state-owned giants like Sinopec. These facilities are critical to China’s oil security, as they capitalize on heavily discounted crude from sanctioned countries, including Iran, Russia, and Venezuela.
Teapots account for a quarter of China’s total refinery capacity. However, they often operate with narrow or negative margins and have recently faced pressure from tepid domestic demand.
The US sanctions have created further operational hurdles, specifically regarding the ability of refiners to sell products under correct place-of-origin markings.
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