China Defends Firms As US Sanctions Hengli Over Iran Oil

(MENAFN- Asia Times) China has vowed to safeguard domestic enterprises after the United States imposed sanctions on a Dalian-based oil refiner and several Hong Kong-registered shipping firms over alleged involvement in the Iranian oil trade and shipments.

The US Treasury Department's Office of Foreign Assets Control (OFAC) on April 24 added Hengli Petrochemical (Dalian) Refinery Co Ltd to the Specially Designated Nationals and Blocked Persons List (SDN List), describing it as China's second-largest independent“teapot” refiner and“one of Tehran's most valued customers.

The OFAC said Hengli (Dalian) generated hundreds of millions of dollars for Iran's military through crude purchases. It said that, since at least 2023, the company has received more than five million barrels of Iranian crude from multiple sanctioned shadow‐fleet vessels.

In parallel, the US also sanctioned around 40 shipping firms and vessels alleged to be operating as part of Iran's so-called shadow fleet. These vessels are registered in jurisdictions including Hong Kong, mainland China, the United Arab Emirates, Vietnam and Malaysia.

Hengli Petrochemical Co, a Shanghai-listed company and the parent of the sanctioned Hengli (Dalian), said it has always operated in full compliance with applicable laws and regulations. It said it has never traded with Iran, and that all suppliers certify their crude is sourced from jurisdictions not under US sanctions.

“The US Treasury's decision to place Hengli (Dalian) on the SDN List lacks factual and legal basis and constitutes a unilateral sanction. We firmly oppose these groundless allegations and unlawful measures, and will take all necessary steps to safeguard the legitimate rights and interests of the company and its shareholders,” Hengli said.

It added that operations remain normal with high utilization rates, production and sales proceeding as planned, and crude inventories sufficient for more than three months, with procurement unaffected.

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“China opposes illicit unilateral sanctions that have no basis in international law. We urge the US to stop willfully slapping sanctions and using long-arm jurisdiction. China will firmly defend the lawful rights and interests of Chinese companies,” Lin Jian, a spokesperson of the Chinese Foreign Ministry, said in a regular media briefing on Monday.

On April 14, Hengli Petrochemical Co said its revenue fell 14.9% year-on-year to 201 billion yuan (US$28 billion) in 2025, while net profit rose 0.4% to 7.1 billion yuan. Its refining and petrochemical complex in Dalian is one of China's four major private refining projects, alongside others led by Zhejiang Petroleum and Chemical Co Ltd and Shenghong Petrochemical Group.

The richest woman in China

The refinery at the center of the dispute is owned by Fan Hongwei, widely regarded as one of China's wealthiest self-made women on the Hurun Rich List.

She began in 1994 by acquiring a near-bankrupt textile plant in Suzhou with her husband, Chen Jianhua, then scaled it rapidly through capacity expansion and opportunistic equipment purchases during the Asian financial crisis. In the early 2000s, she moved upstream to secure supply, investing heavily in the production of purified terephthalic acid (PTA) and driving down costs.

In 2010, the group won a bid for the large refining and petrochemical project on Dalian's Changxing Island, beating several state-owned competitors, and built a 20‐million‐metric-ton complex. The move cemented a vertically integrated model and established the company as a major private energy and manufacturing powerhouse.

In October 2022, Fan was named China's richest woman by Bloomberg, overtaking Longfor Group co-founder Wu Yajun. She has consistently ranked among the top self-made women on the Hurun Rich List. In 2026, she was placed eighth among the world's wealthiest self-made women.

“Just as news emerged that the US and Iran might resume peace talks, Washington moved swiftly to escalate sanctions,” says Hua Xiangming, a Jiangsu-based columnist.“Many in the international community see this as an attempt to gain leverage at the negotiating table.”

He says targeting foreign refineries and freezing overseas assets to strengthen bargaining power reflects“a typical form of hegemonic politics,” adding that such actions have effectively abandoned any pretense of adherence to free trade or market principles.

“The so-called evidence chain is highly ambiguous. The US Treasury claims the sanctions are linked to billions of dollars' worth of Iranian oil purchases, yet the details remain unclear,” he says, warning that the weaponization of the US dollar will prompt more countries to accelerate their de-dollarization efforts.

“The dollar's share of global reserves has fallen below 60%, a multi-decade low. Countries now see that relying on dollar settlement risks asset freezes and financial coercion,” he says.“Alternatives are emerging, from non-dollar oil pricing to new payment channels such as China's Cross-Border Interbank Payment System (CIPS), accelerating efforts to reduce dependence on the dollar.”

Secondary sanctions

On April 15, US Treasury Secretary Scott Bessent said Washington had warned banks across multiple jurisdictions, including two in Hong Kong, about the potential imposition of secondary sanctions if they process transactions linked to Iran.

The Telegraph reported on April 21 that a US federal court in New York had ordered five major global banks, including HSBC, Standard Chartered, JPMorgan, Citibank and Bank of New York Mellon, to hand over documents in a civil case linked to alleged Iran sanctions evasion. The banks are not accused of wrongdoing and are involved only in their capacity as correspondent lenders.

The OFAC said on April 24 that some of the sanctioned vessels are linked to Hong Kong entities:

Lisboa, owned by Hong Kong-based Lisboa Shipping Company Limited, carried more than 2.5 million barrels of Iranian naphtha to the UAE between July 2025 and January 2026. Lynn, owned by Hong Kong-based Ting Tao Company Limited, conducted ship-to-ship transfers of Iranian crude oil off the coast of Malaysia before delivering the cargo to China. Stellar Beverly, owned by Hong Kong-based Yegua Trading Limited, transported over two million barrels of Iranian crude to China in 2025. Covenio, owned by Hong Kong-based Extensive Shipping Limited, has moved more than six million barrels of Iranian oil to China since early 2025. Golden Sunrise, owned by Hong Kong-based Xifoides Group Limited, has transported several million barrels of Iranian oil since mid-2025.

Citing information from the Treasury Department, US media reported that Iran routed roughly US$9 billion in 2024 through US correspondent accounts using networks of front companies, with activity concentrated in Hong Kong, Oman and the UAE.

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A Henan-based columnist says the reported US$9 billion in transactions during 2024 has become“a hot potato” for financial institutions.

“Banks now have to comb through records to identify Iran-related flows and report them, a process that could take months,” he says.“During that time, business may be disrupted and costs will rise, leaving institutions that prioritize stability facing significant operational strain.”

“To manage risk, banks are likely to tighten scrutiny of Middle East clients, especially those linked to Iran-related trade,” he says.

He says that, over the medium and long term, Iran will find alternative channels to keep funds moving, while oil traders may turn to currencies such as the euro or the renminbi to reduce reliance on the dollar.

Read: Hong Kong banks dependent on SWIFT are warned of new US sanctions

Follow Jeff Pao on X at @jeffpao3

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