China Defies US Sanctions on Iran Oil as American Pressure Wanes

China’s Ministry of Commerce has issued an official injunction blocking United States sanctions against five domestic oil refineries accused of purchasing Iranian crude, signaling a sharp escalation in economic tensions between Beijing and Washington.

The directive, issued on May 2, 2026, mandates that the U.S. Measures shall not be recognised, implemented, or complied with, according to statements from the ministry. Chinese officials described the sanctions as a violation of international law and the basic norms governing international relations.

Targeted Refineries and U.S. Allegations

The injunction specifically protects five companies identified by the Ministry of Commerce:

• Hengli Petrochemical (Dalian) Refinery
• Shandong Jincheng Petrochemical Group
• Shandong Shouguang Luqing Petrochemical
• Shandong Shengxing Chemical
• Hebei Xinhai Chemical Group

The move follows a series of restrictive measures imposed by the U.S. Treasury and State Departments as part of a broader campaign termed Economic Fury, aimed at disrupting Iran’s primary revenue streams. In April 2026, the U.S. Treasury sanctioned Hengli Petrochemical, alleging the firm had purchased billions of dollars worth of Iranian petroleum.

Further escalating the pressure, the U.S. State Department announced sanctions on May 1, 2026, against the China-based operator Qingdao Haiye Oil Terminal Co., Ltd. And its president, Li Xinchun. American officials stated the company had imported tens of millions of barrels of sanctioned Iranian crude oil, generating billions of dollars in revenue for Tehran.

Diplomatic and Legal Conflict

Beijing has framed its defiance as a defense of national sovereignty against what it calls long-arm jurisdiction. Liu Pengyu, a spokesperson for the Chinese Embassy in Washington, stated that China opposes unilateral sanctions and long-arm jurisdiction that have no foundation in international law.

Liu added that normal economic and trade cooperation between Chinese firms and other nations should not be interfered with or undermined, asserting that the Chinese government remains committed to protecting the legitimate rights of its enterprises.

The conflict centers largely on independent teapot refineries, primarily located in Shandong province. These smaller, private refineries rely heavily on discounted Iranian crude to maintain narrow profit margins amid slow domestic demand. According to a U.S. Department of the Treasury alert issued on April 28, 2026, China purchases approximately 90 percent of Iran’s oil exports, with these teapot refineries accounting for the majority of those imports.

Impact on U.S.-Iran and U.S.-China Relations

The timing of the injunction coincides with a fragile diplomatic environment. The U.S. And Iran are currently operating under a ceasefire that began on April 7, 2026, following the start of military hostilities known as Operation Epic Fury on February 28, 2026.

While President Donald Trump has indicated he is reviewing a new 14-point proposal from Iran to end the conflict, the U.S. Has maintained a naval blockade of Iranian ports. U.S. Officials have stated that the continued flow of oil to China undermines the goal of choking off funding for the Iranian regime’s military and nuclear programs.

The defiance also complicates a planned summit between President Trump and President Xi Jinping, scheduled for later in May 2026. Analysts suggest that Beijing’s activation of its blocking rules—which allow Chinese firms to sue for compliance in domestic courts—increases the geopolitical friction heading into the meeting.

The U.S. Treasury continues to warn financial institutions about the risks of engaging with the shadow fleet—a network of vessels using deceptive shipping practices, such as ship-to-ship transfers and falsified documentation, to move Iranian oil to Asian markets.