Washington on Friday sanctioned Hengli Petrochemical’s Dalian refinery — a roughly 400,000‑barrel‑a‑day plant the US says has been buying Iranian crude — and about 40 shipping firms, measures intended to choke off Iran’s oil revenue by cutting the named entities off from the US financial system.

What the US did

The US Treasury and the Office of Foreign Assets Control (OFAC) on Friday placed sanctions on Hengli Petrochemical’s Dalian refinery and roughly 40 shipping companies and tankers Washington says carried Iranian crude. The measures are designed to block the named firms from the US financial system and penalise third parties that trade with them.

  • The Treasury described Hengli’s Dalian facility as a large independent refinery with about 400,000 barrels-a-day processing capacity that has bought Iranian crude since 2023.
  • Treasury officials said the shipping firms form an opaque network that masks crude origin as cargo moves to buyers in Asia.
  • The package follows earlier White House and Treasury warnings about secondary sanctions on banks and financial centres that facilitate Iranian oil sales.

China’s reaction and the refinery’s role

China’s embassy in Washington protested the measures, saying Beijing opposes unilateral penalties it regards as illegal and urging the US not to politicise trade or technology matters. The embassy said such steps should not harm normal trade.

US officials flagged Hengli’s Dalian refinery as one of the bigger independent processors in China and said smaller independent refineries — often called "teapots" — commonly source crude through long trading chains that can obscure origin. Analysts note these refineries account for a sizable slice of China’s throughput.

Energy markets and trade ties

The sanctions come amid turbulence in global energy markets. Recent US moves in the Persian Gulf, and heightened scrutiny of correspondent banking ties in China, Hong Kong, the UAE and Oman, underline the strategic sensitivity of crude flows and payments.

  • Traders and refiners now face operational questions about replacing barrels previously moved through opaque channels and settling payments without triggering secondary restrictions.
  • Companies named on the lists lose access to US dollar clearing and many correspondent banking services, complicating commodity deals that use the dollar as the common vehicle of payment.
  • For Chinese refiners, the measures could disrupt existing contracts and raise costs for alternative supplies and payment routes.

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The measures target a 400,000‑barrel‑a‑day refinery and about 40 vessels and firms — a bid Washington says will choke off a key revenue stream for Tehran while adding a fresh point of friction with Beijing.

This article was created with AI assistance.