China’s Commerce Ministry has formally blocked U.S. sanctions on five Chinese oil refiners, declaring them invalid under international law.

The injunction prevents Washington from recognising or enforcing restrictions against Hengli Petrochemical and four ‘teapot’ refineries, a move that underscores Beijing’s defiance amid escalating U.S. efforts to choke off Iranian oil revenues.

China’s Ministry of Commerce announced on Saturday that it had issued an injunction to counter U.S. sanctions imposed on five Chinese refiners accused of purchasing Iranian oil. The ministry identified the companies as Hengli Petrochemical (Dalian) Refinery, Shandong Jincheng Petrochemical Group, Hebei Xinhai Chemical Group, Shouguang Luqing Petrochemical, and Shandong Shengxing Chemical. 

These firms include some of China’s independent ‘teapot’ refineries, which collectively account for about a quarter of the nation’s refining capacity.

The U.S. Treasury had sanctioned Hengli Petrochemical in April, accusing it of buying billions of dollars’ worth of Iranian oil. This was part of Washington’s broader campaign to restrict Tehran’s oil revenue, which has long been a critical source of funding for the Iranian state.

The Trump administration had already imposed sanctions on the other four refineries in 2025, citing similar violations.

China’s Commerce Ministry stated that the sanctions violate international law and the basic norms of international relations. As a result, it issued an injunction stipulating that the United States cannot recognise, implement, or comply with the sanctions against the five Chinese companies.

This legal measure effectively shields the refiners from U.S. enforcement within China’s jurisdiction, though it does not eliminate the practical difficulties they face in global trade.

The sanctions have created operational hurdles for the refiners. These include difficulties in receiving crude shipments and the need to sell refined products under different names to avoid detection. Independent refiners, or ‘teapots’, already operate on narrow or sometimes negative margins. They have been further squeezed by weak domestic demand in China, making the sanctions an additional burden on their operations.

The injunction reflects Beijing’s broader strategy of resisting U.S. economic pressure while maintaining energy security. China has consistently argued that unilateral sanctions undermine international trade order and disrupt normal economic exchanges. By instructing its companies to ignore U.S. restrictions, Beijing is signalling its determination to protect domestic firms and challenge Washington’s extraterritorial application of sanctions.

This development also comes against the backdrop of heightened geopolitical tensions. The U.S. has intensified its sanctions regime against Iran, while China has sought to secure energy supplies amid volatile global markets.

The move by China’s Commerce Ministry highlights the clash between Washington’s sanctions policy and Beijing’s assertion of sovereignty over its economic affairs.

The refiners named in the injunction are significant players in China’s energy landscape. Hengli Petrochemical’s Dalian facility alone has a processing capacity of around 4,00,000 barrels per day, making it one of the largest independent refineries in the country.

The ‘teapot’ refineries, though smaller, collectively contribute substantially to China’s refining output and regional energy supply.

By blocking U.S. sanctions, China is not only defending its companies but also reinforcing its stance against what it views as unlawful interference in international trade. The decision underscores the growing economic and political friction between Beijing and Washington, particularly in the energy sector, where both nations’ strategic interests collide.

Reuters