China responds to expanded U.S. sanctions on Iranian oil trade

The United States has expanded its sanctions regime against Iran’s energy sector, specifically targeting entities involved in the trade of Iranian crude oil. Recent actions by the U.S. Treasury and State Departments have focused on Chinese-based refineries, storage terminals, and shadow-fleet tankers accused of facilitating Iranian oil exports. This includes a series of sanctions throughout 2025 and 2026 targeting petrochemical terminals and vessel management firms.

Chinese officials have criticized these measures, with the Chinese Embassy in Washington warning that such pressure tactics could destabilize the Middle East and hinder global economic growth. Embassy spokesperson Liu Pengyu urged a return to diplomacy and political settlement through dialogue.

Internal assessments within China suggest growing concern regarding the potential for secondary sanctions to extend into the financial sector. While previous sanctions have targeted independent refineries and shipping networks, there is significant apprehension that targeting major banks could disrupt international financial settlements and decouple Chinese enterprises from the U.S. dollar-based system. Chinese authorities are reportedly evaluating the impact on the country’s financial, energy, and foreign trade systems to determine how to balance strategic energy ties with Iran against the risks of being excluded from the U.S. financial network.