China’s Ministry of Commerce instructs firms to defy US sanctions on Iranian oil

China has ordered companies to ignore US sanctions against Iran’s oil, forcing a direct test of Washington’s ability to enforce its sanctions on Iran.

The new order, issued by China’s Ministry of Commerce on Sunday, calls for a 2021 “prevention clause” that prevents firms from complying with foreign sanctions deemed illegal. The order applies to many Chinese refiners accused by the United States of buying Iranian impurities, including large private processors known as “tea factories”.

The move represents a shift from years of vague activity to open government-backed opposition, as Beijing signals it will not cooperate with US efforts to cut off a key source of revenue for Iran.

US POINTS TO CHINA’S SAFEGUARD TO IRAN’S OIL SEAL, TANKS ‘SHADOW’

“This is unprecedented. It’s a huge escalation in China’s response to US economic sanctions. It’s a measure of Beijing’s defiance,” said Max Meizlish, senior research analyst at the Foundation for Defense of Democracies.

The escalation comes as the Trump administration is stepping up its sanctions drive, targeting Chinese refiners and warning financial institutions that they could face penalties for facilitating oil trade between Iran and China.

Treasury Secretary Scott Bessent has accused Beijing of successfully subsidizing Iran’s military operations through its oil purchases, saying China’s demand supports Tehran’s economy.

“China, let’s see them step up with some negotiations and get the Iranians to open the floodgates,” Bessent said in an interview with Fox News on Monday.

“Iran is the biggest state sponsor of terrorism … China has been buying 90 percent of its energy, so it is financing the biggest sponsor of the terrorist state,” he added.

China remains the main destination for Iranian crude oil, as most of the country’s permitted oil flows to Chinese refiners despite increased US pressure.

“It puts firms in China in a situation where they comply with a CCP order or a US order and either way there could be consequences,” Meizlish said.

TRUMP DELAYS 11TH MEETING AS IRAN NEGOTIATIONS GET STUCK IN CHINA’S OIL SQUARE

This issue is expected to be a major point of contention in the upcoming meeting between President Donald Trump and Chinese leader Xi Jinping.

At the same time, diplomacy is gaining momentum.

Iranian Foreign Minister Abbas Araghchi arrived in Beijing on Wednesday for talks with Chinese Foreign Minister Wang Yi, underscoring China’s growing role as Iran’s main oil customer and important diplomatic intermediary.

Despite increasing sanctions and US naval embargoes aimed at limiting oil exports to Iran, shipments have continued through seamless maritime networks. Data from maritime intelligence firm Windward shows an increase in ships operating without tracking signals, and most ships in the Strait of Hormuz have recently gone “black,” making law enforcement more difficult.

IRAN SHIFTS 20M WELLS FOR ‘BLACK’ OIL OFFSHORE OY NETWORK THROUGH US PORT BLOCKADE, FIRM SAYS

In one recent summary, 146 of 167 ships in the area were not transmitting location information, according to the report.

China has ordered companies to ignore US sanctions against Iranian oil, forcing a review of Washington’s ability to enforce its attack on Tehran. (Dominique Patton/Reuters)

Windward analysts also identified the continuation of clandestine transshipment activity at Iran’s main export hub on Kharg Island, including large tankers operating without a trace despite heightened enforcement pressure.

“I don’t expect this to change much in the way that China has helped to avoid sanctions on Iran,” Meizlish said.

Those flows are largely supported by demand from Chinese refiners, particularly small independent operators who often operate outside the US financial system and are largely locked in to regulatory pressures.

“This is a clear attempt by Beijing to put the ball back in the US court and see if it will actually do it,” Meizlish added.

In this photo provided by the US Central Command, US military personnel patrol the Arabian Sea near the M/V Touska on April 20, 2026, after firing on an Iranian-flagged ship that the US accused of trying to violate the embargo on US ships in Iranian ports near the Strait of Hormuz. (US Navy via Getty Images)

Beijing’s decision to formally order companies not to comply with US sanctions adds a new layer to global corporations. The ban allows Chinese companies to seek damages in domestic courts from banks, insurance companies, or shipping companies that cut ties to comply with US measures.

Analysts say the move could force multinational firms into a difficult position, balancing access to the Chinese market against the risk of being cut off from the US financial system.

CLICK HERE TO DOWNLOAD THE FOX NEWS PROGRAM

“There is no other factor more important to Iran than China,” Meizlish said.

The standoff highlights a broader challenge for Washington: while sanctions remain a key tool of US foreign policy, enforcement against major economies like China, especially where transactions can be made outside the dollar system, is more difficult.

Fox News Digital has reached out to the Chinese embassy in Washington for comment.