The Trump administration sanctioned Hengli Petrochemical’s Dalian refinery and about 40 shipping companies and vessels tied to Iranian oil sales.
The Trump administration has imposed sanctions on a major independent Chinese refinery accused of buying billions of dollars’ worth of Iranian oil, expanding Washington’s effort to cut off a key source of revenue for Tehran.
The Treasury Department said Friday it targeted Hengli Petrochemical (Dalian) Refinery, describing it as one of Iran’s largest customers for crude oil and petroleum products. Treasury’s Office of Foreign Assets Control also sanctioned about 40 shipping companies and vessels that it said operate as part of Iran’s shadow fleet, the network used to move sanctioned oil through global markets.
The action comes as Washington and Tehran head into another round of talks over the weekend, adding pressure to an already strained diplomatic track. U.S. officials say Iranian oil exports help fund the government’s military activity and regional operations; China has objected to what it calls illegal unilateral sanctions that harm ordinary trade.
Hengli’s Dalian facility is a so-called “teapot” refinery, an industry term for independent Chinese refiners known for buying discounted crude, including barrels from sanctioned producers. Treasury said Hengli has received Iranian oil cargoes from sanctioned vessels since at least 2023 and has purchased oil linked to Iran’s armed forces.
Sanctions generally freeze any U.S.-based assets of designated entities and bar Americans from doing business with them. The practical effect on Chinese independent refiners can be uneven, because many have limited exposure to the U.S. financial system, sanctions experts have said. Still, Washington has increasingly aimed at the vessels, intermediaries and buyers that keep Iranian oil moving.
Treasury Secretary Scott Bessent said the United States is imposing a “financial stranglehold” on Iran’s government. “Treasury will continue to constrict the network of vessels, intermediaries, and buyers Iran relies on to move its oil to global markets,” Bessent said.
China’s embassy in Washington pushed back Friday, saying normal trade should not be affected. “We call on the U.S. to stop politicizing trade and sci-tech issues and using them as a weapon and a tool and stop abusing various kinds of sanction to hit Chinese companies,” an embassy spokesperson said.
China remains the dominant destination for seaborne Iranian oil. More than 80% of Iran’s shipped oil went to China in 2025, according to data from analytics firm Kpler cited in the source material. Teapot refiners account for roughly a quarter of China’s refining capacity, but they often operate on narrow or negative margins and have faced weak domestic demand.
The latest move follows earlier U.S. sanctions on Chinese independent refiners, including Hebei Xinhai Chemical Group, Shandong Shouguang Luqing Petrochemical and Shandong Shengxing Chemical. Those actions created hurdles for the companies, including difficulty receiving crude and pressure to sell refined products under different names.
Washington has also signaled possible action beyond refiners and tankers. Bessent told reporters earlier this month that Treasury had written to two Chinese banks warning that the United States was prepared to impose secondary sanctions if it could prove Iranian money was flowing through their accounts. Whether the latest designations significantly slow Iranian oil sales may depend on how far the administration is willing to extend that pressure.
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