China's Teapot Refineries Bypass Sanctions to Buy Cheap Crude from Tehran

Hengli Group, one of China's largest privately held industrial houses, has emerged as a major buyer of discounted crude oil from sanctioned countries, according to US Treasury disclosures. The group's refinery arm on Changxing Island has been accused by the US of purchasing billions of dollars worth of Iranian petroleum.

The case highlights how China's private refiners have become a crucial outlet for discounted sanctioned oil, helping Iran preserve export revenue under pressure from Washington. Hengli Group's rise to prominence is an unusually fast one, having grown from a modest textile operation into a major industrial player with over $100 billion in annual revenue.

The attraction of sanctioned crude for Hengli and other Chinese refiners lies in its lower price: up to 25% cheaper than international benchmarks. This has created a parallel market where sanctioned oil can still find buyers, despite official channels being constrained by US pressure.

China's teapot refineries have absorbed nearly all of Iran's exported petroleum last year, exceeding $30 billion in purchases and effectively helping finance the country's ruling establishment. The significance of this trade lies not only in its scale but also in its implications for global sanctions policy and energy security.