China Hits Back at US Sanctions on Oil Refineries Linked to Iran

The United States and China are in a new standoff after Washington imposed sanctions on five Chinese oil refineries, prompting Beijing to issue a counter order protecting them.

The dispute centers on refineries accused by the US Treasury Department of processing Iranian crude and generating billions in revenue for Iran, in violation of existing restrictions. The sanctions were announced in April.

In response, China’s Ministry of Commerce invoked its 2021 Blocking Rules for the first time, ordering domestic companies to ignore the US measures and continue dealing with the targeted refineries. Beijing argues the US sanctions violate international law and interfere in its internal affairs.

The order puts multinational firms and banks in a difficult position. Complying with US sanctions could breach Chinese law and lead to fines or operational limits in China. Following Beijing’s directive, however, risks secondary US sanctions, including losing access to the US dollar system.

Among the refineries covered are Hengli Petrochemical’s Dalian facility and four independent “teapot” refineries in Shandong and Hebei. These smaller processors have been key buyers of discounted Iranian crude, giving Tehran an outlet despite US pressure to curb its oil exports.

Analysts say the clash creates legal uncertainty for global energy and finance markets. Any US move to sanction Chinese banks could further disrupt payments for Iranian oil. The timing adds strain ahead of a planned meeting between US President Donald Trump and Chinese President Xi Jinping.

The standoff highlights growing fragmentation in the global sanctions system and the risks for companies caught between conflicting US and Chinese rules.