Beijing throws down the gauntlet. China blocks US sanctions on Iranian oil

China's Commerce Ministry has banned the recognition of US sanctions on five refineries in connection with oil trade with Iran, the government daily Renmin Ribao reported on Sunday. This puts global companies in a trap: they face retaliation from Beijing for respecting Washington's sanctions, and US restrictions for ignoring them.

Washington's restrictions “must not be recognized, implemented or followed,” China's Ministry of Commerce (MOFCOM) warned in a statement on Saturday. The ministry stressed that these sanctions “unjustifiably prohibit or restrict the normal economic, commercial and related activities of Chinese enterprises with third countries” and “violate international law and fundamental norms governing international relations.”

The U.S. Treasury blacklisted five independent teapot refineries in late April, including Hengli Petrochemical (Dalian) Refining Co. and Shandong Shouguang Luqing Petrochemical Co. The US authorities accuse these entities of illegal trade in Iranian oil, which involves freezing assets and banning transactions. This is to cut off Theran from its sources of financing.

Global business in a bind

Experts point out that Beijing's move puts global corporations in a stalemate situation.

• If they comply with US restrictions (e.g. cut off supplies to a Chinese company from the US list), they will violate the domestic ban on complying with foreign restrictions and risk penalties and lawsuits in the PRC.
• If they ignore US sanctions, they risk being subjected to restrictions by Washington, including: secondary sanctions.

The formal basis for Beijing's decision, which entered into force on Friday, is the regulation in force since January 2021 on preventing the unjustified extraterritorial application of foreign laws and other measures. These regulations allow MOFCOM to issue special orders that legally prohibit Chinese companies and citizens from complying with certain foreign sanctions that Beijing deems unjustified.

A blow to the American blockade

These decisions are made at a time of diplomatic impasse between the US and Iran in connection with the war that started at the end of February and is currently in a ceasefire. As analysts point out, it is also a confrontational signal sent shortly before the meeting of US President Donald Trump with Chinese leader Xi Jinping, which is scheduled for mid-May.

According to Kpler data from 2025, teapot plants are responsible for about a quarter of China's refining capacity, which buys over 80 percent. oil exported by Iran.

From Beijing Krzysztof Pawliszak (PAP)

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