China’s Ministry of Commerce issued a formal blocking order on May 2, prohibiting Chinese entities from recognizing or complying with US sanctions on five domestic petrochemical firms accused of purchasing Iranian crude oil.
The order covers Hengli Petrochemical (Dalian) Refining Co., Shandong Jincheng Petrochemical Group, Hebei Xinhai Chemical Group, Shandong Shouguang Luqing Petrochemical, and Shandong Shengxing Chemical. All five have been placed on the US Treasury’s Specially Designated Nationals (SDN) list, which freezes their assets and bars transactions with them.
The action is the first formal invocation of China’s 2021 blocking statute, the “Rules on Counteracting Unjustified Extra-territorial Application of Foreign Legislation and Other Measures,” which bars Chinese entities from complying with foreign sanctions Beijing considers unlawful.
A Commerce Ministry spokesperson said the US measures “improperly restrict normal economic and trade exchanges between Chinese companies and third countries” in violation of international law.
The Treasury’s Office of Foreign Assets Control (OFAC) designated Hengli on April 24 as part of its “Economic Fury” enforcement action, describing the Dalian refinery as one of Iran’s largest crude customers with billions of dollars in purchases on record.
Hengli’s parent company denied any dealings with Iran, saying the designations “lack factual and legal basis.” The Trump administration sanctioned the other four refineries in 2025.
The blocking order puts non-US banks, shippers, and insurers in direct legal conflict. Honoring US sanctions now risks liability under Chinese law. Ignoring them risks OFAC penalties.
🇨🇳 China Invokes Blocking Statute for First Time
China’s Ministry of Commerce has for the first time activated its 2021 Blocking Rules, ordering all Chinese firms and individuals not to comply with U.S. sanctions targeting five independent Chinese oil refineries accused of… https://t.co/wAnT9aLNY4
— Drop Site (@DropSiteNews) May 2, 2026
Kpler data shows China purchased more than 80% of Iran’s exported oil in 2025. The five refineries together account for roughly a quarter of China’s total refining capacity.
The order arrives 12 days before Trump’s scheduled May 14 visit to Beijing for talks with Xi Jinping, the first US presidential trip to China in nearly a decade.
