Chinese Banks Halt Loans to Sanctioned Refiners

China Banks Pause Loans to Sanctioned Refiners China's financial regulator has instructed major domestic banks to temporarily halt new loans to five refineries recently sanctioned by the United States. This directive, issued by the National Financial Regulatory Administration (NFRA) as verbal guidance before May 1, specifically advises against extending new yuan-denominated loans to these entities, including Hengli Petrochemical (Dalian) Refinery. Existing credit lines are not to be recalled.

The U.S. Treasury sanctioned Hengli Petrochemical in April, alleging its involvement in purchasing billions of dollars in Iranian oil. This action is part of Washington's ongoing efforts to restrict Tehran's oil revenue. U.S. Treasury Secretary Scott Bessent previously warned Chinese lenders about potential secondary sanctions for processing transactions with Iran.

This guidance from the NFRA contrasts with a May 2 notice from China's Ministry of Commerce, which urged Chinese firms to disregard U.S. sanctions. The Ministry's call to dismiss sanctions marked the first application of blocking measures introduced in 2021, designed to protect Chinese companies from foreign intervention. The U.S. sanctions have reportedly created operational difficulties for the affected refiners, including challenges in crude acquisition and product sales.