Washington: Amid the ongoing conflict with Iran, the United States on Friday imposed strict sanctions on an independent ‘teapot’ refinery in China. The Trump administration said it had sanctioned the refinery for purchasing billions of dollars’ worth of Iranian oil, even as Washington and Tehran prepare for the second round of peace talks, Reuters reported. The US Treasury Department imposed sanctions on Hengli Petrochemical (Dalian) Refinery, stating that it is one of the largest customers of Iranian crude oil and petroleum products. The department also confirmed that it has sanctioned nearly 40 shipping companies and vessels that operate as part of the middle eastern country’s shadow fleet.
Chinese Embassy Urges Us To Stop Abusing Sanctions, Politicising Trade
The Chinese embassy in Washington reacted to the sanctions and said that normal trade should not be harmed, while criticising the US government for ‘abusing’ sanctions to target Chinese companies.
“We call on the U.S. to stop politicising trade and sci-tech issues and using them as a weapon and a tool and stop abusing various kinds of sanction to hit Chinese companies,” a spokesperson for the Chinese embassy said in a statement.
US Sanctions On Chinese Teapot Refiners Create Operational Hurdles, Pressure Margins
In 2025, the Trump administration sanctioned Hebei Xinhai Chemical Group, Shandong Shouguang Luqing Petrochemical and Shandong Shengxing Chemical
These actions created problems for the refiners, who faced difficulties in getting crude oil and selling refined products under different names. Teapots make up about a quarter of China’s refinery capacity, and run on a very thin profit margin.
China Purchases Majority Of Iran’s Exported Oil
The US sanctions, which freeze assets and bar Americans from doing business with designated entities, have stopped some large independent refiners from purchasing crude oil from Iran. Notably, Beijing purchases over 80 percent of Iran’s shipped oil, as per 2025 data from Kpler.
According to experts, the independent refineries are partly shielded from the full effect of US sanctions because they have little exposure to the American financial system. They further said that targeting Chinese banks that are involved in these deals would have a bigger impact on Iranian oil purchases.
The Chinese teapot refiners have recently been paying higher prices than Brent prices for Iranian oil after a temporary US waiver on sanctions. This led to expectations that India could increase its purchases. The US government allowed the waiver to expire last week.
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