Chinese banking authorities have directed the nation’s major financial institutions to temporarily halt new lending to five oil refineries that were recently hit with U.S. sanctions due to their Iranian oil connections, according to a Bloomberg News report published Wednesday citing sources with knowledge of the situation.
Reuters was unable to independently confirm the Bloomberg report.
The National Financial Regulatory Administration (NFRA) issued verbal instructions to banks telling them to stop providing new yuan-based loans while allowing existing credit arrangements to remain in place, according to the report.
Banking institutions were instructed to examine their business relationships with several companies, including Hengli Petrochemical (Dalian) Refinery, which ranks as China’s largest private oil refiner, sources told Bloomberg.
Neither the NFRA nor Hengli Petrochemical provided immediate responses to Reuters’ requests for comment.
The banking directive, issued prior to May 1, stands in direct opposition to guidance released May 2 by China’s Ministry of Commerce, which instructed Chinese companies to ignore American sanctions.
This represents the first instance of China implementing blocking measures, which were established in 2021 to shield Chinese businesses from what the government views as unjustified foreign interference.
Last month, the U.S. Treasury Department levied sanctions against Hengli Petrochemical, alleging the company purchased billions of dollars worth of Iranian oil as part of Washington’s ongoing campaign to reduce Tehran’s petroleum revenues.
Treasury Secretary Scott Bessent revealed last month that the United States had warned two Chinese financial institutions they could face secondary sanctions if found to be handling transactions with Iran, though he did not name the specific banks.
The American sanctions have created operational challenges for the affected refineries, including complications in receiving crude oil shipments and forcing them to market refined products under alternative brand names.
