China’s financial regulator has reportedly advised the nation’s largest lenders to temporarily suspend new loans to five refineries recently sanctioned by the United States. This guidance comes amidst their alleged ties to Iranian oil, as reported by Bloomberg News on Wednesday, citing sources familiar with the matter. Reuters was unable to immediately verify the report.
The National Financial Regulatory Administration (NFRA) issued verbal guidance instructing banks to refrain from extending new yuan-denominated loans. However, the directive specifically did not advise recalling existing credit lines. Banks were also reportedly told to review their current business dealings with several companies, including China’s largest private refiner, Hengli Petrochemical (Dalian) Refinery. Hengli Petrochemical (Dalian) Refinery operates as one of China’s largest private refiners, primarily focused on processing crude oil to produce various refined petroleum products.
This official directive, issued before May 1, reportedly contrasts with a subsequent notice from China’s Ministry of Commerce on May 2, which urged firms to disregard U.S. sanctions. The Ministry’s call to dismiss sanctions marks the first application of China’s 2021 blocking measures, designed to shield Chinese companies from foreign intervention deemed unwarranted. In April, the U.S. Treasury imposed sanctions on Hengli Petrochemical, accusing it of purchasing billions of dollars in Iranian oil. This was part of Washington’s long-standing effort to curb Tehran’s oil revenue, with U.S. Treasury Secretary Scott Bessent having warned Chinese lenders of potential secondary sanctions for processing transactions with Iran. The sanctions have already created operational hurdles for affected refiners, including difficulties in receiving crude and selling products under different names.
