China’s Ministry of Commerce announced on May 3, 2026, that US sanctions imposed against five Chinese “teapot” refineries violate international law, and Beijing refuses to cooperate with enforcement. This declaration marks a significant escalation in the Sino-US confrontation over Iranian oil imports.
Background
The term “teapot” refineries refers to independently operated small-scale refineries in China, as opposed to large state-owned enterprises like CNPC and Sinopec. These refineries have long been significant buyers in the global crude oil market, including purchases of Iranian crude.
The US imposed these sanctions on the grounds that the five refineries were importing Iranian oil. Following the US-Israeli military strikes on Iran on February 28, Washington has intensified its sanctions campaign against Iran’s oil export network, seeking to pressure Tehran economically.
China’s Position
In its statement, the Ministry of Commerce made clear that:
- Unilateral US sanctions violate international law and global trade norms
- As a sovereign nation, China has the right to conduct normal energy trade based on its own interests and international law
- China opposes any country imposing its domestic law above international law
This position is consistent with Beijing’s longstanding opposition to US “long-arm jurisdiction.”
Geopolitical Implications
This incident represents the latest example of the broader geopolitical ripple effects triggered by the US-Iran war:
- Energy market fragmentation: US sanctions are pushing the global energy market toward further division, creating parallel trade systems — one within the sanctions regime and one outside it.
- Sino-US competition: The divergence between Beijing and Washington on Iranian oil reflects deeper competition between the two powers in shaping the global energy order.
- Spillover from the Iran war: The 65-day conflict is having profound implications for the global trade system and the international legal framework.
Market Reaction
Analysts note that China’s refusal to cooperate with sanctions could set a precedent for other nations facing similar pressure. The global oil market may further bifurcate into “sanctioned” and “non-sanctioned” parallel systems, posing a long-term challenge to the dollar-dominated international oil trading framework.
Meanwhile, Iran’s 14-point peace proposal to the United States is under review. If peace negotiations make progress, the related sanctions issues could also become part of the negotiation agenda.