China's Commerce Ministry orders firms to defy U.S. sanctions on Iranian oil

Key Points:

• China has issued a directive instructing companies to ignore U.S. sanctions on Iranian oil, invoking a 2021 "blocking statute" that prohibits compliance with foreign sanctions deemed illegitimate, marking a significant escalation in Beijing's resistance to U.S. pressure.
• The order targets Chinese refiners, including smaller "teapot" refineries accused by the U.S. of purchasing Iranian crude, challenging Washington's efforts to cut off Iran's key revenue source amid intensified sanctions under the Trump administration.
• U.S. Treasury Secretary Scott Bessent accused China of financing Iran’s military through oil purchases, while China remains the primary destination for Iranian crude despite U.S. sanctions and naval blockades, with many shipments using opaque maritime networks to evade detection.
• The dispute is expected to be a major issue in upcoming talks between President Trump and Chinese leader Xi Jinping, as China also deepens diplomatic ties with Iran, underscoring its dual role as Iran’s main oil customer and a key diplomatic interlocutor.
• Beijing’s blocking statute exposes multinational firms to legal risks if they comply with U.S. sanctions, forcing them to choose between access to the Chinese market and the U.S. financial system, highlighting the difficulty of enforcing sanctions against major economies like China.