China, one of Iran’s largest oil buyers, relies heavily on discounted Iranian crude, much of it processed by smaller independent “teapot” refineries concentrated in eastern provinces such as Shandong.

The Chinese commerce ministry said U.S. sanctions targeting the firms, announced separately since last year, “shall not be recognized, implemented, or complied with,” describing the restrictions as unilateral measures lacking legal legitimacy.

The ministry said the sanctions “improperly prohibit or restrict Chinese enterprises from conducting normal economic, trade and related activities with third countries” and argued they violated international law and the basic norms governing international relations.“The Chinese government has consistently opposed unilateral sanctions lacking U.N. authorization and a basis in international law,” the ministry said in a statement.

The injunction applies to three companies based in Shandong province Shandong Jincheng Petrochemical Group, Shandong Shouguang Luqing Petrochemical and Shandong Shengxing Chemical along with Hengli Petrochemical (Dalian) Refinery and Hebei Xinhai Chemical Group.

Washington has intensified efforts to curb Iran’s oil revenues, which it says help finance Tehran’s regional activities and strategic programs, by expanding sanctions on Chinese refiners and shipping entities involved in the trade.

On Friday, the United States imposed sanctions on another Chinese company, Qingdao Haiye Oil Terminal Co. Ltd., alleging it had imported “tens of millions of barrels” of Iranian crude worth billions of dollars for Tehran.That company was not included in Beijing’s latest formal injunction.

The dispute comes as U.S.-Iran tensions remain high following the conflict triggered by U.S.-Israeli strikes on Iran in late February, with diplomatic efforts failing so far to produce a lasting resolution.Energy flows through the Gulf and the Strait of Hormuz remain under close international scrutiny as sanctions pressure and military tensions continue to shape global oil markets.

The sanctions dispute also adds another layer of complexity ahead of U.S. President Donald Trump’s expected visit to China later this month, where talks with Chinese President Xi Jinping are likely to include trade disputes, regional security and Iran-related tensions.

The world’s largest oil importer boosted production through a combination of intensified drilling at ageing fields, offshore expansion and early-stage shale development, but experts say further gains will be constrained by rising costs and geological limits.

China’s output reached about 4.32 million barrels per day last year, and government targets outlined in its latest five-year plan call for maintaining production near 4 million bpd through 2030.

Industry observers view this level as a strategic baseline to support manufacturing and energy security.

Despite these efforts, China remains heavily dependent on imports, which stood at 11.55 million bpd last year, underscoring the structural gap between domestic supply and demand.

Zhu Weilin said national oil companies are working to sustain output at current levels to guard against supply disruptions, particularly as global markets face volatility.

Much of China’s production resilience comes from mature oilfields such as Daqing oil field, a cornerstone of the country’s energy sector for decades. The field continues to produce roughly 600,000 bpd, supported by advanced recovery techniques.

Engineers have deployed “tertiary recovery” methods, including chemical injection, to extract remaining reserves from ageing wells.

These techniques can increase output by about 20% compared to traditional water-injection methods.The scale of such operations has made China a global leader in enhanced oil recovery, with expertise exported to projects in countries including Iraq and Saudi Arabia.

While shale oil output is expected to grow and potentially double by 2035, analysts say it remains commercially challenging due to higher extraction costs and technical complexity.

Offshore production, another key driver of recent growth, is also showing signs of slowing expansion, further limiting upside potential.

The production plateau comes as China navigates shifting energy dynamics, including slowing economic growth and a transition toward electrification in transport, which is expected to temper demand growth over time.

At the same time, disruptions linked to conflict in the Middle East a region supplying roughly half of China’s crude imports have reinforced the importance of maintaining stable domestic output.