China has sharply escalated trade tensions with the U.S. by invoking its 2021 Blocking Rules for the first time, directing companies to ignore American sanctions on five Chinese oil refineries. The order, issued by the Ministry of Commerce, effectively tells firms operating in China to continue business with the targeted refiners despite U.S. restrictions.
The move comes just weeks before a planned meeting between President Donald Trump and Xi Jinping. Washington has already sanctioned the refineries for processing Iranian crude, and any extension of measures to Chinese banks could disrupt the payment channels behind those trades. Beijing’s directive creates a direct legal conflict: firms complying with U.S. sanctions risk penalties in China, while those following Chinese rules could lose access to the U.S. financial system.
The protected entities include Hengli Petrochemical’s Dalian refinery and four independent “teapot” refiners, which play a key role in China’s processing sector and have been major buyers of discounted Iranian oil. The U.S. Treasury blacklisted them in April, accusing them of generating significant revenue for Tehran.
Beijing says its response is grounded in its Anti-Foreign Sanctions Law, arguing that U.S. measures represent unlawful extraterritorial enforcement. The result is a legal squeeze on multinational firms and banks, which now face conflicting obligations—and potential penalties—on both sides.
Note by Alessandro Bazzoni