China Orders Firms to Ignore US Sanctions on Iranian Oil Refiners

China has issued an order prohibiting domestic entities from recognizing or complying with US sanctions on five refiners linked to Iranian oil trade. The directive, released on Saturday, aims to protect national interests and counters what Beijing describes as unlawful restrictions on normal trade.

Multiple sources confirmed the sanctions targeted privately owned processors, including asset freezes and transaction bans. The US measures were imposed last month on one refiner and recently on others, according to reports. Beijing's response marks the first activation of its 2021 blocking statute, which was designed to shield companies from foreign laws deemed unjustified.

The order allows affected refiners to seek compensation in local courts from entities that adhere to the US sanctions.

China remains the largest buyer of Iranian oil, with shipments often routed indirectly through private refiners and not reflected in official customs data. The refiners process the oil into products like gasoline and diesel. US efforts to curb Iran's oil revenue have previously focused on smaller entities to avoid broader economic fallout.

The targeted refiners represent a significant portion of China's private refining sector, which accounts for about a third of the country's total capacity. Energy security is a key priority for China, and the private sector includes large operations in provinces like Liaoning and Shandong.

This development occurs weeks before an anticipated meeting between President Trump and Chinese President Xi Jinping in mid-May. The summit, the first US presidential visit to China in eight years, was delayed by the Iran conflict and is expected to address issues including energy shocks, trade, and sanctions.

Analysts from Eurasia Group, led by Dominic Chiu, stated that the blocking measure is unlikely to derail the summit but could prompt a US reaction. They noted that if the US extends secondary sanctions to Chinese banks or state-owned entities, Beijing may respond with stronger countermeasures.

“The Chinese government has consistently opposed unilateral sanctions that lack authorization from the United Nations and a basis in international law." — The country's commerce ministry, May 2, 2026 (Bloomberg). The refineries primarily deal with unsanctioned Chinese banks, according to the analysts. Extending sanctions could heighten tensions amid ongoing energy disruptions in Asia from the Hormuz chokepoint.”

China's action signals a more assertive stance against US sanctions, potentially encouraging continued Iranian oil imports. The private refiners, once small independent players known as teapots, have grown into major operations. Recent US sanctions on these entities may be linked to leverage ahead of the summit, as suggested in some coverage.

China has recently increased fuel exports to neighboring countries to alleviate shortages caused by global energy shocks. The blocking order does not affect China's international obligations or protections for foreign investors, according to the statement.

Beijing will monitor foreign laws for improper extraterritorial application and take further steps if needed.