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Chinese refinery Hengli accused of financing Iran
Economy
Hengli denies trading with Iran, claiming to comply with regulations in all markets where it operates, and suppliers have provided similar assurances.
The US Treasury Department has accused the refining arm of Chinese conglomerate Hengli Group of purchasing billions of dollars worth of Iranian oil, placing the company at the center of a US campaign against Tehran's oil exports, the Wall Street Journal reports.
Hengli denies trading with Iran, claiming to comply with regulations in all markets where it operates, and suppliers have provided similar assurances.
Industry analysts, shipbrokers, and US officials call Hengli a major player in China's network of independent refineries—so-called "teapots"—that purchase sanctioned oil at a discount.
According to a March report by the Commission on US-China Economic and Security Relations, China purchased more than $30 billion worth of Iranian oil last year, absorbing virtually all of Tehran's oil exports. Independent refineries can purchase Iranian oil at a discount of up to 25%, significantly increasing their margins. Unlike China's large state-owned energy companies, many "teapots" have limited ties to the US financial system and are less vulnerable to dollar-denominated sanctions.
The Hengli refinery on Changxing Island is one of the five largest in China, generating approximately $30 billion in annual revenue. The broader conglomerate operates in petrochemicals, textiles, and shipbuilding.
In April, the US Treasury Department imposed sanctions on Hengli's refining division, leaving its other business units unaffected.
Shipping data reviewed by the publication indicate that sanctioned tankers have delivered more than 5 million barrels of Iranian oil to Hengli since 2023.
One of the vessels, the Seeker 8, stopped transmitting its position data near the port of Hengli for three days in January. When the signal resumed, a sharp change in the vessel's draft indicated the unloading of a large cargo, analysts noted.
In May, China's Ministry of Commerce ordered companies not to comply with US sanctions restrictions against Hengli and several other refineries.
Beijing opposes unilateral US sanctions and declares its intention to protect China's energy security. Since then, Iran's oil exports have declined amid the US naval blockade, but the duration and effectiveness of these restrictions remain uncertain.