The company’s shift follows an April designation by the U.S. Treasury’s Office of Foreign Assets Control, which accused the firm of purchasing billions of dollars in Iranian petroleum. While Hengli maintains that the sanctions lack legal merit and claims its supply network remains robust, the firm is now actively securing non-Iranian volumes, including at least 2 million barrels from West Africa scheduled for June delivery.

This transition presents a significant logistical hurdle. Even as Hengli attempts to scrub its portfolio of Iranian-linked oil, it faces a market wary of secondary sanctions. Potential sellers in the global energy sector may hesitate to engage with an entity currently on the U.S. blacklist, creating a complex Catch-22 for the refiner as it tries to prove its compliance while maintaining production capacity at its Dalian plant.