SHANGHAI, May 2 - China’s Ministry of Commerce announced on Saturday that it has issued an injunction intended to block U.S. sanctions levied against five Chinese refiners accused of purchasing Iranian oil, according to state media reports.
The ministry identified the five companies as Hengli Petrochemical (Dalian) Refinery and four so-called "teapot" refineries: Shandong Jincheng Petrochemical Group, Hebei Xinhai Chemical Group, Shouguang Luqing Petrochemical and Shandong Shengxing Chemical.
In April, the U.S. Treasury placed sanctions on Hengli Petrochemical, alleging the company bought billions of dollars of Iranian oil. The ministry noted that the previous U.S. administration imposed sanctions last year on the other four refineries named, among others.
Describing the U.S. measures as a breach of "international law and the basic norms of international relations," the ministry said it had therefore issued an injunction. The ministry said the injunction "stipulates that the United States cannot recognize, implement, or comply with the sanctions imposed on the aforementioned five Chinese companies."
The ministry also highlighted practical effects that the sanctions have had on the refiners, saying the measures have created obstacles including difficulties in obtaining crude supplies and situations where refined products had to be sold under different names.
Industry structure was also noted in the ministry's discussion. The four teapot refineries are reported to account for roughly a quarter of Chinese refinery capacity, operate on narrow and occasionally negative margins, and have recently been under pressure from weak domestic demand.
The injunction represents a formal legal step by the Commerce Ministry to counteract the U.S. sanctions as described. The ministry's statement frames the U.S. actions as invalid in their application to the five named firms and underlines operational and market strains the companies have encountered as a result of the measures.
Context and immediate effects
- The injunction is framed as preventing recognition or enforcement of the U.S. sanctions against the five named Chinese refiners.
- The U.S. Treasury sanctioning of Hengli in April is cited as a recent escalation related to alleged purchases of Iranian oil; the other four refiners were among entities sanctioned during the prior U.S. administration.
- Practical difficulties already reported by the ministry include trouble securing crude and the need for refiners to market products under alternate names.
The ministry's public stance and the injunction formalize Beijing's rejection of the applicability of the U.S. sanctions to these Chinese companies and draw attention to the commercial pressures faced by teapot refineries within China’s refining sector.