U.S. imposes sanctions on a China-based oil refinery and 40 shippers over Iranian oil

Treasury Secretary Scott Bessent testifies on his agency's proposed budget estimates for fiscal year 2027 at a Senate Appropriation subcommittee, at the Capitol in Washington, Wednesday, April 22, 2026. (AP Photo/J. Scott Applewhite)

WASHINGTON — U.S. President Donald Trump’s administration is placing economic sanctions on a major China-based oil refinery and roughly 40 shipping companies and tankers involved in transporting Iranian oil.

The move, announced Friday and first reported by The Associated Press, makes good on Trump’s threat to impose secondary sanctions on companies and countries that do business with Iran. It’s also part of his Republican administration’s overall ramped-up campaign to cut off Iran’s key source of revenue -- its oil exports.

Concurrently, the U.S. this month imposed a physical blockade on the Strait of Hormuz, the Persian Gulf waterway that is crucial to global energy supplies.

The sanctions, which cut off the companies from the U.S. financial system and penalize anyone who does business with them, come just a few weeks before U.S. President Donald Trump and China’s Xi Jinping are due to meet in China.

Included in Friday’s sanctions is Hengli Petrochemical’s facility in the port city of Dalian, which has a processing capacity of roughly 400,000 barrels of crude oil per day, making it one of the biggest independent refineries in China.

The U.S. Treasury Department says Hengli has received Iranian crude oil shipments since 2023 and has generated hundreds of millions of dollars in revenue for the Iranian military.

The advocacy group United Against Nuclear Iran said in February 2025 that Hengli is one of dozens of Chinese purchasers of Iranian oil.

China is the biggest buyer of Iranian oil, importing 80 per cent to 90 per cent of Iranian oil before the U.S.-Israeli war with Iran broke out, though the crude -- transported by a shadow fleet of vessels -- often has its origin obscured but arrives in China as oil from countries such as Malaysia. Smaller refineries, known as teapot refineries, typically are the buyers of Iranian oil.

Iran has previously said that its demands for ending the war include the lifting of sanctions.

U.S. Treasury Secretary Scott Bessent said Friday that his agency “will continue to constrict the network of vessels, intermediaries and buyers Iran relies on to move its oil to global markets.”

Earlier this month, Bessent’s department sent a letter to financial institutions in China, Hong Kong, the UAE and Oman threatening to levy secondary sanctions for doing business with Iran and accusing those countries of allowing Iranian illicit activities to flow through their financial institutions.

Bessent said during a White House press briefing on April 15 that the administration has told countries “that if you are buying Iranian oil, that if Iranian money is sitting in your banks, we are now willing to apply secondary sanctions, which is a very stern measure.”

The sanctions come as the global energy trade is in turmoil as war around the Persian Gulf chokes off oil and natural gas shipments, causing prices to soar.

Treasury has tried to quell the impact of rising oil prices issuing temporary sanctions waivers on Russia oil and a one-time waiver on Iranian oil already at sea.

The AP was making efforts to contact Chinese officials for comment on the sanctions.

China has disagreed with previous U.S. sanctions, but its major companies and banks still comply with U.S. sanctions because they are more exposed to the U.S.-dominated financial system.

After the U.S. earlier this month sanctioned a Chinese refinery accused of buying Iranian oil, Liu Pengyu, a spokesperson for China’s embassy in Washington, said the use of the sanctions “undermines international trade order and rules, disrupts normal economic and trade exchanges, and infringes upon the legitimate rights and interests of Chinese companies and individuals.”

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Fatima Hussein, The Associated Press