Trump Administration Sanctions Hengli Petrochemical Dalian Refinery, Targeting Iran’s Oil Shadow Fleet

The Trump administration imposed new U.S. sanctions on a China-based oil refinery and dozens of shipping firms and vessels as part of efforts to disrupt Iran’s oil exports ahead of high-stakes U.S.-Iran talks.

The Treasury Department announced the measures on Friday, targeting Hengli Petrochemical (Dalian) Refinery Co., described as China’s second-largest “teapot” or independent refinery, and also sanctioning about 40 shipping firms and vessels alleged to be operating as part of Iran’s “shadow fleet.”

Al Jazeera

The Hill reported that the sanctions take aim at a main revenue stream for Iran, and said Treasury Secretary Scott Bessent framed the campaign as part of the war effort to deprive Tehran of money to arm its military, quoting Bessent’s statement that “Economic Fury is imposing a financial stranglehold on the Iranian regime, hampering its aggression in the Middle East, and helping to curtail its nuclear ambitions.”

Al Jazeera likewise said the Treasury targeted Hengli and imposed sanctions on “about 40 shipping firms and vessels.”

Türkiye Today described the same Friday action as Washington and Tehran preparing for another round of peace talks over the weekend, with the Treasury Department’s Office of Foreign Assets Control also imposing sanctions on about 40 shipping companies and vessels.

The sanctions block U.S. persons or companies from doing business with the blacklisted entity and freeze U.S. property owned, or majority owned, by the sanctioned entities, according to The Hill.

In parallel, the U.S. Navy has blockaded Iranian ports since April 13, which President Donald Trump said is intended to further choke Iran’s proceeds from oil and gas exports, according to Al Jazeera and Türkiye Today.

The sanctions were announced as the U.S. and Iran prepared for talks and as Washington tightened pressure on Iran’s ability to sell oil.

The Hill said the sanctions were timed “ahead of high-stakes talks between the U.S. and Iran over ending the war, expected for Saturday,” and it also said the measures were meant to put pressure on Chinese President Xi Jinping before President Trump visits the country in May.

Al Jazeera

It added that Trump’s top envoys were headed to Pakistan to hold talks with Iranian officials over a deal to end the “more than two-month war.”

Al Jazeera tied the move to “potential new talks on ending the US-Israeli war on Iran,” and said the U.S. Navy has blockaded Iranian ports since April 13.

Türkiye Today similarly described the sanctions as coming as Washington and Tehran prepared for “another round of peace talks over the weekend.”

The Northwest Arkansas Democrat-Gazette connected the sanctions to Trump’s threat to impose secondary sanctions on companies and countries that do business with Iran, and said the move is part of a ramped-up campaign to cut off Iran’s key source of revenue, its oil exports.

That same article said the U.S. this month imposed a physical blockade on the Strait of Hormuz, described as “crucial to global energy supplies,” and it placed the sanctions “just a few weeks before Trump and China’s Xi Jinping are due to meet in China.”

China rejected the sanctions and accused the U.S. of using trade and technology issues as leverage.

Al Jazeera reported that the Chinese embassy in Washington, DC pushed back against the move, quoting a spokesperson saying, “We call on the US to stop politicising trade and sci-tech issues and using them as a weapon and a tool and stop abusing various kinds of sanction to hit Chinese companies.”

CNBC likewise said China has said it opposes “illegal” unilateral sanctions and repeated the embassy spokesperson’s call to stop “abusing various kinds of sanction to hit Chinese companies.”

Türkiye Today described the same embassy response, saying the spokesperson told Washington to stop “abusing various kinds of sanctions to hit Chinese companies,” and it added that China said normal trade should not be harmed.

The Hill said the sanctions also put pressure on Chinese President Xi Jinping before President Trump visits the country in May, placing the diplomatic context alongside the economic measures.

The Northwest Arkansas Democrat-Gazette reported that after the U.S. earlier this month sanctioned a Chinese refinery accused of buying Iranian oil, Liu Pengyu, a spokesperson for China’s embassy in Washington, said the use of the sanctions “undermines international trade order and rules, disrupts normal economic and trade exchanges, and infringes upon the legitimate rights and interests of Chinese companies and individuals.”

The sanctions campaign also included threats to financial institutions: The Hill said Treasury Secretary Scott Bessent warned that any person or vessel facilitating covert trade and finance risks exposure to U.S. sanctions, and it quoted Bessent saying, “Any person or vessel facilitating these flows — through covert trade and finance — risks exposure to U.S. sanctions.”

While the U.S. Treasury said Hengli was a valued customer for Iranian oil, Hengli Petrochemical denied any business dealings with Iran after the sanctions were imposed on one of its subsidiaries.

NDTV Profit said the denial came two days after the U.S. Treasury’s Office of Foreign Assets Control reportedly sanctioned Hengli Petrochemical (Dalian) Refinery Co., describing it as one of Iran’s largest customers for crude oil and other petroleum products, and it reported that Reuters cited the company’s stock exchange filing on Sunday.

Al-Jazeera Net

NDTV Profit quoted the company as saying it “has never engaged in any trade with Iran,” and that all its crude oil suppliers “guaranteed that the origins of the crude oil supplied do not fall within the scope of US sanctions.”

The company also said it has sufficient crude oil inventories to meet processing needs for more than three months and that its crude oil procurement activities have not been affected in any way, according to NDTV Profit.

It further said the U.S. sanctions “lack factual and legal basis” and that Hengli pledged to strive to lift the relevant restrictions.

Seeking Alpha also reported that Hengli Petrochemical denied any business dealings with Iran after the United States imposed sanctions on one of its subsidiaries for allegedly purchasing Iranian crude.

The dispute over the underlying allegation was reflected in the U.S. framing: The Hill said Treasury said Hengli is one of Iran’s largest customers for crude oil and other petroleum products, having purchased “billions of dollars’ worth of Iranian petroleum,” and Al Jazeera said Hengli “has generated hundreds of millions of dollars in revenue for the Iranian military.”

U.S. officials said the sanctions are meant to keep tightening pressure on the network Iran uses to move oil to global markets, and reporting described additional steps aimed at financial intermediaries.

“The Trump administration said on Friday it imposed sanctions on an independent "teapot" refinery in China for buying billions of dollars' worth of Iranian oil as Washington and Tehran struggle to restart peace talks”

Baird Maritime

The Hill quoted Scott Bessent saying, “At President Trump’s direction, Treasury will continue to constrict the network of vessels, intermediaries, and buyers Iran relies on to move its oil to global markets,” and it added that “Any person or vessel facilitating these flows — through covert trade and finance — risks exposure to U.S. sanctions.”

Baird Maritime

The Northwest Arkansas Democrat-Gazette said Bessent told countries that “if you are buying Iranian oil, that if Iranian money is sitting in your banks, we are now willing to apply secondary sanctions, which is a very stern measure.”

That same article said earlier this month Bessent’s department sent a letter to financial institutions in China, Hong Kong, the UAE and Oman threatening secondary sanctions and accusing those countries of allowing illicit Iranian activities to flow through their financial institutions.

CNBC reported that Bessent told reporters at the White House on April 15 that the Treasury has written to two Chinese banks and “told them that if we can prove that there is Iranian money flowing through your accounts, then we are willing to put on secondary sanctions.”

Al Jazeera said “Last year, the Treasury sanctioned Hebei Xinhai Chemical Group, Shandong Shouguang Luqing Petrochemical and Shandong Shengxing Chemical,” and Türkiye Today and CNBC repeated that list.

Against that backdrop, the U.S. move threatens to reshape the flow of crude and refined products by targeting the vessels and intermediaries tied to Iran’s “shadow fleet,” while Hengli continues to deny any trade with Iran and says it has enough inventories to keep processing for more than three months.