Beijing Fires Back at Trump with a Legal Injunction Protecting Hengli and Four 'Teapot' Refineries

China's Ministry of Commerce fired back at the Trump administration on Saturday, issuing a formal legal injunction ordering that US sanctions imposed on five Chinese oil refineries 'cannot be recognised, implemented, or complied with.' The move marked one of Beijing's most assertive institutional responses yet to Washington's escalating effort to cut off Iranian oil revenue.

The injunction, announced via state news agency Xinhua, covers Hengli Petrochemical (Dalian) Refinery and four so-called 'teapot' refineries: Shandong Jincheng Petrochemical Group, Hebei Xinhai Chemical Group, Shouguang Luqing Petrochemical and Shandong Shengxing Chemical. The ministry declared the US sanctions a violation of 'international law and the basic norms of international relations.'

Hengli at the Centre

Hengli Petrochemical has been at the heart of the dispute since the US Treasury sanctioned it in April, describing it as 'one of Tehran's most valued customers.' The Treasury's Office of Foreign Assets Control accused the Dalian-based refinery of generating hundreds of millions of dollars in revenue for the Iranian military through crude oil purchases, according to the Treasury's OFAC press release, and simultaneously imposed penalties on roughly 40 shipping firms and vessels alleged to be part of Iran's shadow fleet.

The other four refineries named in Beijing's injunction were sanctioned earlier by the Trump administration. Their inclusion alongside Hengli signals that Beijing is now drawing a collective line around the entire group, offering all five a formal domestic legal shield against US pressure.

Teapots Under Pressure

China's 'teapot' refineries are small, privately owned facilities mostly based in Shandong province and have long been central to Beijing's energy security strategy. They play a key role in stockpiling discounted Iranian and Russian crude, while allowing state-owned enterprises to remain insulated from politically sensitive oil trading.

The sanctions have already created tangible difficulties for the named refiners, including problems receiving crude shipments and being forced to sell refined products under different names. Teapot refineries account for roughly a quarter of China's total refining capacity, according to The Guardian, and have been operating under thin or negative margins, squeezed further by tepid domestic demand.

A Widening Confrontation

The injunction arrives at a delicate moment. The Trump administration's sanctions on Hengli were announced just weeks before Trump and Chinese President Xi Jinping are scheduled to meet in Beijing on 14 and 15 May. The sanctions form part of Washington's broader 'maximum economic pressure' campaign against Tehran. In a statement, Secretary Bessent said: '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.'

China, which purchased more than 80 per cent of Iran's shipped oil in 2025, has consistently opposed what it calls 'illicit' unilateral sanctions. In response to the Hengli designation, a spokesperson for China's embassy in Washington called on the US to 'stop abusing various kinds of sanction to hit Chinese companies.'

Saturday's injunction goes considerably further. Rather than a diplomatic statement, it is a formal domestic legal mechanism — one that gives the named refineries explicit cover to continue operating as before, regardless of what Washington demands.

Beijing's use of a formal injunction, rather than merely a political objection, sets a notable precedent in the US-China sanctions stand-off. It reflects the deepening entanglement of the ongoing US-Iran conflict with Sino-American trade tensions, and raises fresh questions about the long-term enforceability of Washington's secondary sanctions regime against firms that operate largely outside the US financial system.