The Trump administration has announced sweeping economic sanctions against a major Chinese oil refinery and around 40 shipping companies and tankers accused of transporting Iranian oil.

The decision, revealed on Friday and first reported by the Associated Press, follows through on Washington’s threat to impose secondary sanctions on entities that continue to do business with Iran. It forms part of the administration’s broader campaign to choke off Tehran’s primary source of revenue, its oil exports.

Alongside these measures, the United States has physically blockaded the Strait of Hormuz, a vital Persian Gulf waterway central to global energy supplies. The timing of the sanctions is notable, coming only weeks before President Donald Trump is scheduled to meet Chinese President Xi Jinping in China.

Among those targeted is Hengli Petrochemical’s refinery in Dalian, which has a processing capacity of about 400,000 barrels of crude oil per day, making it one of China’s largest independent refineries. 

According to the Treasury Department, Hengli has been receiving Iranian crude shipments since 2023, generating hundreds of millions of dollars in revenue for Iran’s military. The advocacy group United Against Nuclear Iran had already identified Hengli in February 2025 as one of dozens of Chinese buyers of Iranian oil.

Treasury Secretary Scott Bessent stressed that his department will continue to dismantle the network of vessels, intermediaries and buyers that Iran relies upon to move its oil globally.

Earlier this month, his office issued letters to financial institutions in China, Hong Kong, the UAE and Oman, warning of secondary sanctions for facilitating Iranian transactions and accusing them of enabling illicit financial flows.

Bessent reiterated during a White House briefing on 15 April that countries purchasing Iranian oil or holding Iranian funds in their banks would now face secondary sanctions, describing the measure as particularly severe.

The sanctions coincide with a period of turmoil in the global energy trade, as conflict in the Persian Gulf disrupts oil and gas shipments and drives prices sharply higher.

In an effort to ease the impact of soaring prices, the Treasury has issued temporary waivers on Russian oil and a one-off waiver for Iranian oil already at sea. The Associated Press reported that it was seeking comment from Chinese officials on the latest sanctions.

Following earlier U.S. action against a Chinese refinery, Liu Pengyu, spokesperson for China’s embassy in Washington, criticised the sanctions as undermining international trade rules, disrupting normal exchanges, and infringing upon the rights of Chinese companies and individuals.

AP