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2w ago

U.S. Blacklists China’s Hengli Refinery Over Iranian Oil Purchases

The sanctions test global supply chains by cutting a major petrochemical hub off from dollar payments.

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An aerial drone photo taken on June 16, 2024 shows a view of a petrochemical industrial park of Hengli Group on Changxing Island of Dalian, northeast China's Liaoning Province. The petrochemical industry, as a pillar industry of the country's northeastern provinces, has optimized industrial structure in recent years to promote high-quality development. (Photo by Yang Qing/Xinhua via Getty Images)

Overview

  • OFAC added Hengli Petrochemical (Dalian) to the SDN list Friday, alleging purchases of Iranian crude that generated hundreds of millions of dollars for Iran’s military.
  • Treasury also targeted about 40 shipping firms and tankers in Iran’s shadow fleet, a network that uses ship-to-ship transfers and opaque ownership to hide where oil comes from.
  • Hengli denied any trade with Iran, said operations and inventories remain stable, and indicated future crude purchases could be settled in yuan.
  • Market fallout came fast as Hengli shares fell 10% and Bloomberg estimated a US$1.4 billion drop in the owners’ wealth, with some Asian petrochemical customers canceling orders.
  • China denounced the move as unlawful, a stance that coincides with banks tightening checks to avoid secondary-sanctions risk ahead of a planned Trump–Xi meeting.