China Issues Injunction to Block U.S. Sanctions on Five Refineries Buying Iranian Oil
Reflecto News | Breaking News | Trade & Geopolitics
BEIJING — China’s Ministry of Commerce (MOFCOM) issued a formal injunction on Saturday, May 2, blocking U.S. sanctions imposed on five Chinese oil refineries accused of purchasing Iranian crude, in a direct challenge to Washington’s “long-arm jurisdiction” .
The injunction, issued under China’s 2021 Blocking Statute (Rules on Counteracting Unjustified Extraterritorial Application of Foreign Legislation), prohibits any Chinese entity from recognizing, implementing, or complying with the U.S. penalties . The move represents Beijing’s most forceful defense of its energy trade with Tehran since the outbreak of the war between the United States and Israel and Iran on February 28 .
🎯 The Five Targeted Refineries
The U.S. Treasury’s Office of Foreign Assets Control (OFAC) had blacklisted the following companies for allegedly handling oil shipments tied to Iran’s military and its so-called “shadow fleet” of tankers .
| Company Name | Location | Type |
|---|---|---|
| Hengli Petrochemical (Dalian) Refinery | Dalian, Liaoning | Major independent refiner |
| Shandong Jincheng Petrochemical Group | Shandong Province | “Teapot” refiner |
| Hebei Xinhai Chemical Group | Hebei Province | “Teapot” refiner |
| Shouguang Luqing Petrochemical | Shouguang, Shandong | “Teapot” refiner |
| Shandong Shengxing Chemical | Shandong Province | “Teapot” refiner |
The U.S. has accused Hengli of purchasing billions of dollars’ worth of Iranian oil, generating revenue for the Iranian military. The other four refineries were sanctioned by the Trump administration last year .
⚖️ The Legal Showdown: China’s Blocking Statute
China’s legal countermeasure is based on the 《阻断外国法律与措施不当域外适用办法》 (Rules on Counteracting Unjustified Extraterritorial Application of Foreign Legislation), a statute enacted in 2021 .
The injunction, officially designated as MOFCOM Announcement No. 21 of 2026, orders that:
“The United States cannot recognize, implement, or comply with the sanctions imposed on the aforementioned five Chinese companies.”
The Ministry stated that the U.S. sanctions “improperly prohibit or restrict Chinese enterprises from conducting normal economic, trade and related activities with third countries… and violate international law and the basic norms governing international relations” .
China’s action creates a “legal trap” for international companies that might otherwise comply with U.S. sanctions. If a non-Chinese company cuts ties with these Chinese firms to avoid U.S. penalties, it could face legal action in China .
🛢️ Why These Refineries Matter
All five companies are significant players in China’s independent refining sector. Collectively, China’s “teapot” refineries account for roughly a quarter of the country’s total refining capacity .
China is a key customer for Iranian oil, mainly through these independent refineries that rely on discounted crude from the Islamic republic . The U.S. has long sought to choke off this revenue stream to Tehran.
“The injunction stipulates that the United States cannot recognize, implement, or comply with the sanctions imposed on the aforementioned five Chinese companies.”
— China’s Ministry of Commerce
Despite the sanctions causing some hurdles — including difficulties receiving crude and having to sell refined products under different names — Beijing is now legally shielding these firms from the consequences of being blacklisted .
🌍 The ‘Shadow Fleet’ Context
The U.S. sanctions are part of a broader campaign—termed “Economic Fury” —targeting the entire supply chain of Iranian oil .
The Trump administration has previously sanctioned dozens of shipping firms and vessels accused of acting as Iran’s “shadow fleet,” which uses ship-to-ship transfers, falsified documents, and disabled tracking systems to smuggle oil to buyers in Asia.
On Friday, the U.S. imposed sanctions on yet another Chinese firm — Qingdao Haiye Oil Terminal Co., Ltd. — which it said had imported “tens of millions of barrels” of Iranian crude oil, generating billions of dollars in revenue for Tehran. That company was not mentioned in Saturday’s injunction .
💬 Official Statements
A MOFCOM spokesperson stated: “The Chinese government has consistently opposed unilateral sanctions lacking UN authorization and a basis in international law. The issuance of this prohibition order is a concrete action taken in accordance with the 2021 Blocking Rules and does not affect China’s performance of its international obligations or its protection of the legitimate rights and interests of foreign-invested enterprises under Chinese law” .
The ministry added that it “will continue to closely monitor cases of improper extraterritorial application of foreign laws and measures” .
📉 Market and Diplomatic Implications
Global banks and shipping insurers now face a dilemma: they risk penalties in the U.S. if they service these firms, but risk legal action in China if they blacklist them.
The move escalates the trade and geopolitical confrontation between the world’s two largest economies as the Iran war enters a fragile ceasefire period. The U.S. Treasury had imposed sanctions on Hengli only in April 2026, accusing it of purchasing billions of dollars’ worth of Iranian petroleum .
📋 Key Takeaways
| Aspect | Summary |
|---|---|
| The Injunction | China’s MOFCOM issued legal order forbidding compliance with U.S. sanctions against 5 refineries |
| The Targets | Hengli Petrochemical (Dalian) and four “teapot” refineries |
| U.S. Allegation | Refineries purchased billions in Iranian oil, funding Iran’s military |
| China’s Stance | U.S. sanctions violate “international law and basic norms of international relations” |
| Legal Basis | China’s 2021 Blocking Statute (阻断办法) |
| The “Shadow Fleet” | Additional sanctions on Qingdao Haiye Oil Terminal announced Friday |
| The Dilemma | International firms face liability in the U.S. if they comply with China, and in China if they comply with the U.S. |
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