New US Sanctions on Sinopec Terminal Unlikely to Stop Flow of Iran–China Oil: Analysts
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The latest U.S. sanctions on Iranian crude oil exports have targeted a major Chinese state-owned terminal and a local refinery. Analysts said that the tightened sanctions will make the import of Iranian crude oil more costly for the Chinese regime and prompt it to look for alternatives, but won’t stop it from buying it.
The terminal had accepted more than a dozen sanctions-evading “shadow fleet” vessels, including KONGM, BIG MAG, and Voy, which the Treasury Department said had transported millions of barrels of Iranian oil to Rizhao, and were part of the network that funds Iran’s nuclear and missile programs and its proxy terrorist groups.
“The Treasury Department is degrading Iran’s cash flow by dismantling key elements of Iran’s energy export machine,” Treasury Secretary Scott Bessent said of the new round of sanctions. “Under President Trump, this administration is disrupting the regime’s ability to fund terrorist groups that threaten the United States.”
Rizhao terminal is 50 percent owned by Sinopec Kantons Holding, a logistics operator of the Chinese state-owned Sinopec. Sinopec, PetroChina, and CNOOC, known as the “Big Three,” are the three largest state-owned oil and gas companies directly controlled by the Chinese communist regime’s central government.
The other half of the terminal is held by the provincial government-controlled Shandong Port Group’s Rizhao Port, according to public data.
‘Teapot’ Refinery Under National Quota
The sanctioned Shandong Jincheng Petrochemical Group Co., Ltd., which the Treasury Department said was an independent “teapot” refinery in Shandong Province that had purchased millions of barrels of Iranian oil since 2023. The “teapot” refineries are a general term used in the international market for small and medium-sized private refineries in China.The privately or locally owned teapot refiners are concentrated in Shandong, distinct from the central state-owned “Big three,” U.S.-based independent economist Davy J. Wong told The Epoch Times.
“They are not centrally controlled but operate within national quota and tax frameworks. After receiving crude import and refining quotas in recent years, they expanded rapidly and once accounted for around one-fourth of China’s total refining capacity. This group has been a major buyer of discounted Iranian crude and thus faces the most direct disruption from the sanctions,” Wong explained.
Following the sanctions imposed in July and August, “this is the fourth round of sanctions where the Trump Administration has targeted China-based refineries that continue to purchase Iranian oil,” the Treasury Department stated.
“The Lanshan terminal has an annual handling capacity of around 56 million tons and is a key gateway for China’s crude imports linked to Sinopec,” Wong said. So, this round of sanctions “delivers a material blow to the Iran–China oil flow.”
As a result of the sanctions, “shipowners, ports, insurers, and agents will exercise greater caution, leading to longer waiting times, berth approvals, and higher transaction costs,” he said of the impact on China’s oil industry.
The Rizhao port is located in Shandong, and there are oil refineries near the oil import terminal. Shen Ming-shih, research fellow at the Division of National Security Research at Taiwan’s Institute for National Defense and Security Research, told The Epoch Times. “So, the U.S. sanctions are targeting these ports or these companies with precision.”
Alternatives
China’s oil imports come primarily from two sources: Russia, which flows through Vladivostok, or directly into Northeast China from the Daqing oilfield; the other is Iranian crude oil, which is shipped directly by long-distance tankers to Shandong in East China for unloading, Shen noted.The Chinese regime is exploring alternative routes and ports, as the United States tightens sanctions, he said.
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“Other coastal ports could absorb part of its throughput,” Wong said. “The Qingdao port system, also in Shandong Province, including Huangdao and Dongjiakou ports, serves as another major hub.”
But with sanctions tightening in Lanshan and possibly extending to Qingdao, “the market already shows signs of rerouting and flag-switching—some Iranian barrels are being relabeled as Indonesian-origin—but with higher costs and uncertainty,” Wong pointed out.
Meanwhile, China’s ongoing buildup of commercial and strategic crude reserves offers some buffer against temporary disruptions, Wong said of the impact. “Sinopec’s broad network of ports, pipelines, and capital allows better resilience compared to small private refiners.”
Unlikely to Stop
As to the impact, Shen said that “any oil shipped from Iran to China will be subject to sanctions. Given that China’s oil primarily comes from Iran and Russia, it will certainly be affected. However, given the current severe economic downturn in China, demand for oil is unlikely to be as high as before.”China is “unlikely to stop importing Iranian or Russian crude oil,” Wong predicts, but “imports will slow, reroute, and come with higher risk premiums.”
“The United States has expanded legal tools such as the SHIP Act to extend sanctions to ports, shipowners, and refiners, aiming to squeeze Iran’s export volumes to China,” he said.
Shen said he anticipates that the United States will probably impose further sanctions against Iranian and Chinese oil entities.
