Overview
- China’s Commerce Ministry invoked its 2021 blocking rules for the first time, ordering companies not to recognize or follow U.S. sanctions on Hengli Petrochemical (Dalian) and four other refineries.
- U.S. Treasury sanctioned the refiners after alleging Hengli helped generate hundreds of millions of dollars for Iran’s military through crude purchases and warned banks about facilitating those flows.
- Under China’s law, targeted firms must notify the ministry within 30 days, the government can forbid compliance with foreign measures, and Chinese companies can sue for damages if partners cut ties to honor U.S. sanctions.
- Enforcement remains hard as tanker traffic grows more opaque, with maritime data showing many ships in the Strait of Hormuz switching off tracking and covert loadings continuing at Iran’s Kharg Island.
- The standoff now shadows U.S.–China diplomacy as Beijing hosts Iran’s foreign minister, and it carries high stakes for traders, banks, and insurers because China buys the bulk of Iran’s oil.