China blocks US sanctions against five ‘teapot’ refineries

Key Points:

• China has issued an injunction blocking US sanctions on five Chinese refiners accused of purchasing oil from Iran, labeling the sanctions as violations of international law and an infringement on China’s sovereignty and development interests.
• The US Treasury Department sanctioned these refiners, including Hengli Petrochemical, for generating significant revenue for the Iranian military through crude oil purchases, with the sanctions barring them from the US financial system.
• China’s Ministry of Commerce condemned unilateral US sanctions lacking UN authorization and emphasized that the sanctions should not be recognized or enforced by Chinese entities.
• The targeted refiners, known as “teapot” refineries, are smaller, independent facilities crucial to China’s oil supply strategy, often buying discounted crude from sanctioned countries like Iran, Russia, and Venezuela.
• Despite challenges from US sanctions and weak domestic demand, these teapot refineries account for about a quarter of China’s refinery capacity and have been key in maintaining China’s oil imports, especially from the Middle East.