China Defies US Sanctions Against Refiners

(MENAFN) China's Ministry of Commerce has issued a sweeping directive ordering domestic companies to disregard US sanctions targeting refiners allegedly tied to the Iranian oil trade — a bold move that widens the deepening economic standoff between Washington and Beijing.

The directive follows a warning issued late last month by the US Treasury, which put banks on notice against conducting business with so-called "teapot" refineries — privately owned operations that Washington claims account for the bulk of China's Iranian crude purchases. "This revenue ultimately benefits the Iranian regime, its weapons programs, and its military," the Treasury said in its notice.

China's government and its major state-owned enterprises have flatly denied directly procuring Iranian crude, while official customs records show no registered imports from Iran since 2023.

Beijing has long maintained that sanctions imposed without a UN mandate constitute a violation of international law. In a Saturday statement, China's Ministry of Commerce declared the US restrictions an unlawful interference in legitimate trade between Chinese firms and third parties, invoking "national sovereignty, security and development interests" as the legal basis for banning compliance.

A government spokesperson moved to reassure foreign investors, stressing that the directive would not undermine China's international obligations or the protections afforded to foreign-invested companies operating on Chinese soil.

"The ministry will continue to closely monitor the improper extraterritorial application of foreign laws and measures, and will carry out further work in accordance with the law if such situations arise," the spokesperson added.

The diplomatic clash unfolds against a volatile energy backdrop. Oil prices have surged sharply since US and Israeli forces struck Iran in late February, triggering the closure of the Strait of Hormuz — a critical chokepoint through which approximately one-fifth of global oil and LNG flows pass daily.

While Tehran has kept the strategic waterway sealed to "hostile ships," the US Navy has enforced a blockade of Iranian ports across the Persian Gulf.

Despite a ceasefire declared nearly a month ago, a durable peace settlement remains elusive, with both sides trading accusations over unacceptable negotiating terms. Oil prices punched past $120 per barrel this week — their highest level since 2022.

The conflict has also taken a heavy political toll at home, driving US President Donald Trump's approval rating to record lows while further straining ties with European allies, whose governments have refused to lend support to military operations against Iran.

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