Beijing has formally directed Chinese companies to ignore U.S. sanctions on Iranian and Russian oil refiners, invoking its 2021 Anti-Foreign Sanctions Law. The May 2, 2026 directive mandates continued trade despite OFAC adding 17 refining entities to its SDN list in early 2026. China imported 1.87 million bpd of Iranian crude in March 2026 (+12% YoY) and 342,000 bpd of Russian refined products in Q1 2026 (+29% YoY). Banks must submit monthly yuan-payment reports to the PBOC starting June 1, 2026, and shipping firms must retain voyage logs for five years. At least 43 tanker voyages from Iran to China were tracked in Q1 2026.
According to www.bloomberg.com, Chinese authorities have directed domestic companies to disregard U.S. sanctions targeting Iranian and Russian oil refiners. The directive, issued in early May 2026, applies specifically to entities sanctioned under Executive Order 13876 and subsequent Treasury Department designations related to petroleum refining infrastructure.
Regulatory Directive and Enforcement Mechanism
The State Council’s General Office circulated internal guidance on May 2, 2026, instructing ministries including the Ministry of Commerce (MOFCOM) and the National Development and Reform Commission (NDRC) to ensure compliance with China’s Anti-Foreign Sanctions Law, enacted in June 2021. That law authorizes countermeasures against foreign sanctions deemed to violate international law or China’s sovereignty. According to the report, the directive explicitly prohibits Chinese firms from terminating contracts, freezing payments, or suspending shipments solely due to U.S. secondary sanctions on refiners such as Petrochemical Holding Company (Iran) and Tatneft Refining Division (Russia).
Commercial Impact and Trade Flows
China imported 1.87 million barrels per day (bpd) of crude oil from Iran in March 2026, up 12% year-on-year, per data from China’s General Administration of Customs. Concurrently, refined product imports from Russia—including diesel and fuel oil—reached 342,000 bpd in Q1 2026, a 29% increase over Q1 2025. These volumes reflect continued reliance on sanctioned suppliers despite U.S. enforcement actions: the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) added 17 refining-related entities to its Specially Designated Nationals (SDN) list between January and April 2026.
Supply Chain Implications for Global Operators
For supply chain professionals, the directive introduces concrete operational constraints. Banks processing yuan-denominated payments for sanctioned refiners must now file monthly reports to the People’s Bank of China (PBOC), effective June 1, 2026. Shipping firms chartered by Chinese state-owned enterprises—including COSCO Shipping Energy Transport Co., Ltd.—are required to retain voyage records for five years, per NDRC Notice No. 2026-087. Practitioners report that vessel tracking platforms such as MarineTraffic have logged at least 43 tanker voyages from Iranian ports to Chinese refineries since January 2026, with average transit time of 22 days.
Industry Context and Parallel Measures
This action follows similar moves by other major economies. India’s Directorate General of Foreign Trade (DGFT) issued guidelines in March 2026 permitting rupee-based settlements with Iranian refiners, citing force majeure clauses in bilateral trade pacts. Meanwhile, the European Union’s REPowerEU plan includes €2.3 billion in funding for alternative refining capacity, partly aimed at reducing dependency on sanctioned sources. According to Bloomberg, Chinese refiners’ use of Iranian condensate feedstock rose to 68% of total imports in Q1 2026, up from 52% in Q1 2025—a shift enabled by expanded blending capabilities at facilities including Zhenhai Refining & Chemical Co., a Sinopec subsidiary.
Source: Bloomberg
Compiled from international media by the SCI.AI editorial team.
