The United States has imposed sweeping new sanctions targeting Iran’s oil exports, striking directly at one of China’s largest state-owned refiners, Sinopec, by designating a key crude terminal that handles roughly one-fifth of the company’s total oil imports.
The move intensifies tensions between Washington and Beijing just weeks before Presidents Donald Trump and Xi Jinping are scheduled to meet.
The U.S. Treasury Department announced on Thursday that it had sanctioned Rizhao Shihua Crude Oil Terminal Co. Ltd, accusing the facility of receiving Iranian oil transported aboard sanctioned vessels.
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Rizhao Shihua accepted more than a dozen of Iran’s so-called shadow fleet vessels, the Treasury said, listing tankers such as Kongm, Big Mag, and Voy, which it said carried “several million barrels of Iranian oil to Rizhao.”
Located in the coastal city of Lanshan in eastern Shandong province, the terminal is jointly owned by Sinopec Kantons Holding—a logistics arm of Sinopec—and Shandong Port Group’s Rizhao Port, backed by local government interests. According to Chinese corporate data platform Qichacha, each party holds a 50 percent stake. The facility operates three berths capable of handling Very Large Crude Carriers (VLCCs), each with the capacity to carry up to 2 million barrels of oil.
The Rizhao terminal is a critical hub in China’s refining network. Shipping data from analytics firm Vortexa and multiple industry executives show that Sinopec handles the majority of the crude passing through the port. In 2024, Sinopec imported about 804,000 barrels per day (bpd) via Rizhao—representing roughly 20 percent of its total crude imports. The port’s pipelines supply two major Sinopec subsidiary refineries—Sinopec Luoyang Petrochemical in Henan province and Sinopec Yangzi Petrochemical in Jiangsu province—with a combined processing capacity of 420,000 bpd. Rizhao also indirectly serves several smaller refineries along the Yangtze River through pipeline connections.
The sanctions on Rizhao Shihua mark the fifth time Washington has designated an oil import terminal in Shandong, a region that serves as the heart of China’s independent refining industry and a major destination for crude shipments from Iran, Venezuela, and Russia. Collectively, the sanctioned facilities represent about half of Shandong’s VLCC handling capacity.
Industry experts said the impact could be significant. “Compared to the previous round of sanctions on Chinese terminals, the impact could be larger,” said Samuel Kong, a senior analyst at energy consultancy FGE. “In the near term, we could see disruptions to discharges around Rizhao, and vessels carrying non-sanctioned barrels might seek alternative ports in Shandong to unload their cargoes.”
FGE estimates that about 10 to 20 percent of crude imported through Rizhao comes from sanctioned sources, but the sweeping restrictions could complicate all trade passing through the port.
The new measures are part of a broader U.S. effort to choke off Iran’s energy revenue by targeting its logistics network and shipping fleet. Treasury Secretary Scott Bessent said the administration is “degrading Iran’s cash flow by dismantling key elements of Iran’s energy export machine.” The sanctions package also includes several ships and an independent Chinese refinery accused of processing Iranian crude.
The impact on the market was swift. Spot freight rates for VLCCs on the Middle East–China route rose about 3 percent on Friday amid concerns over potential port congestion and discharge delays resulting from the sanctions. Shipping sources said several vessels bound for Rizhao had begun seeking alternative destinations along the Shandong coast.
The sanctions also follow a broader pattern of Washington’s enforcement actions against China-linked entities accused of facilitating Iran’s oil trade. In early 2025, U.S. authorities blacklisted a China-based crude oil storage facility linked to an independent refinery, while the Haiye Dongjiakou terminal in Qingdao—once handling up to 200,000 bpd of Iranian crude—was sanctioned and forced to suspend operations.
To adapt, Chinese refiners have increasingly used indirect channels to continue importing Iranian oil. Traders have rebranded Iranian crude as originating from Malaysia to evade detection. Discounts for Iranian oil have also widened as inventories built up and import quotas for smaller refiners in Shandong became increasingly constrained.
Beijing had last year denounced the U.S. sanctions, which it called “illegal” and said they have no basis in international law, urging Washington to abandon the wrong practice of arbitrarily resorting to sanctions and to stop interfering in normal energy cooperation between China and other countries.
Industry insiders say Sinopec is now reviewing its crude logistics network to mitigate the impact. Executives familiar with the matter told Reuters that the company could redirect shipments to other terminals, including Ningbo or Qingdao, or increase throughput at nearby refineries to offset possible production losses at Luoyang and Yangzi plants.
Still, such adjustments could take time and increase costs, particularly for a supply chain built around the Rizhao terminal’s pipeline infrastructure.
Analysts say the sanctions highlight Washington’s growing use of financial and logistical pressure to target Beijing’s role in sustaining Iran’s oil exports. The measures come shortly after China announced tighter controls on rare earth mineral exports, a move widely interpreted as a counterweight to U.S. trade restrictions.
With Trump preparing to meet Xi later this month, the sanctions are expected to feature prominently in discussions between both leaders.