UPSC Prelims Practice Questions — U.S. slaps sanctions on China-based refinery, shippers over Iran oil trade

Q1. With reference to the legal and institutional framework underpinning the recent U.S. sanctions on Chinese refiners and shippers dealing in Iranian oil, consider the following: 1. Executive Order 13902 provides authority to designate Iran's petroleum and petrochemical sectors. 2. The Office of Foreign Assets Control (OFAC) administers and enforces the designations. 3. Non-U.S. (third-country) persons can be targeted through secondary sanctions. 4. The measures derive their binding authority from a United Nations Security Council resolution. Which of the above is/are NOT correct?

  1. Executive Order 13902 provides authority to designate Iran's petroleum and petrochemical sectors.
  2. The Office of Foreign Assets Control (OFAC) administers and enforces the designations.
  3. Non-U.S. (third-country) persons can be targeted through secondary sanctions.
  4. The measures derive their binding authority from a United Nations Security Council resolution.
  • A. 1 only
  • B. 4 only
  • C. 2 and 3
  • D. 3 and 4

Q2. Which one of the following is the primary Executive Order relied upon as the legal authority for U.S. secondary sanctions targeting Iran's petroleum and petrochemical sectors?

  • A. Executive Order 13224
  • B. Executive Order 13846
  • C. Executive Order 13902
  • D. Executive Order 13871

Q3. China's independent 'teapot' refineries together account for approximately what share of the country's total crude oil refining capacity?

  • A. About one-tenth
  • B. About one-quarter
  • C. About one-half
  • D. About four-fifths

Q4. In the context of China's oil sector, the term 'teapot refinery' most precisely refers to which one of the following?

  • A. Small, privately-owned independent refineries not affiliated to the state-owned oil majors
  • B. State-owned refineries dedicated to filling China's strategic petroleum reserve
  • C. Offshore floating refineries that process crude in international waters to avoid sanctions
  • D. Refineries jointly operated by Sinopec and PetroChina for export-grade fuels

Q5. Shadow-fleet tankers frequently register under an open registry (a 'flag of convenience') to obscure ownership and evade oversight. Which one of the following is such a flag increasingly adopted by these tankers?

  • A. Gabon
  • B. United Kingdom
  • C. Japan
  • D. South Korea

Q6. With reference to the deceptive practices used by the 'shadow fleet' of tankers to move sanctioned oil, consider the following: 1. Conducting ship-to-ship transfers in international waters to relabel and mix cargo. 2. Switching off Automatic Identification System (AIS) transponders to 'go dark'. 3. Spoofing a vessel's location to appear far from its actual position. 4. Insuring vessels through mainstream Western Protection & Indemnity (P&I) clubs. Which of the above is/are correctly identified as shadow-fleet tactics?

  1. Conducting ship-to-ship transfers in international waters to relabel and mix cargo.
  2. Switching off Automatic Identification System (AIS) transponders to 'go dark'.
  3. Spoofing a vessel's location to appear far from its actual position.
  4. Insuring vessels through mainstream Western Protection & Indemnity (P&I) clubs.
  • A. 1 and 2 only
  • B. 1, 2 and 3
  • C. 2, 3 and 4
  • D. 1 and 4 only

Q7. In the U.S. Treasury's designation, Sepehr Energy Jahan Nama Pars Co. — linked to the supply of the sanctioned Iranian crude — is best described as which one of the following?

  • A. The oil-sales arm of Iran's Armed Forces General Staff
  • B. Iran's state-owned National Iranian Oil Company (NIOC)
  • C. The foreign-exchange settlement arm of Iran's central bank
  • D. A Chinese teapot refinery operating on Changxing Island

Q8. With reference to the April 2026 U.S. sanctions action centred on Hengli Petrochemical's Dalian refinery, consider the following: 1. The Dalian refinery has a crude processing capacity of roughly 400,000 barrels per day. 2. Around 40 shipping companies and vessels were designated alongside the refinery. 3. The U.S. Treasury stated the refinery had received Iranian crude since 2023. 4. Hengli is a state-owned refinery operated as a subsidiary of Sinopec. Which of the above is/are NOT correct?

  1. The Dalian refinery has a crude processing capacity of roughly 400,000 barrels per day.
  2. Around 40 shipping companies and vessels were designated alongside the refinery.
  3. The U.S. Treasury stated the refinery had received Iranian crude since 2023.
  4. Hengli is a state-owned refinery operated as a subsidiary of Sinopec.
  • A. 4 only
  • B. 1 and 2
  • C. 3 only
  • D. 2 and 4

Q9. The 'maximum pressure' policy, running alongside the 2025-26 U.S.-Iran talks, is best defined as which one of the following?

  • A. A campaign to drive Iran's oil exports toward zero so as to deny the government revenue
  • B. A Western price cap fixing a ceiling on the sale price of Iranian crude
  • C. A naval blockade closing the Strait of Hormuz to Iranian tankers
  • D. A multilateral quota limiting Iran's permitted oil exports to pre-agreed levels

Q10. The Office of Foreign Assets Control (OFAC), which designated the Chinese refinery and shippers and maintains the Specially Designated Nationals (SDN) List, functions under which one of the following U.S. departments?

  • A. The Department of the Treasury
  • B. The Department of State
  • C. The Department of Justice
  • D. The Department of Commerce

Q11. With reference to China's response to the U.S. designation of Hengli and other refiners, consider the following: 1. China's Ministry of Commerce ordered domestic firms not to comply with the U.S. sanctions on the five designated refiners. 2. China invoked its anti-foreign-sanctions law to enable retaliation against entities enforcing the measures. 3. China responded by directing the People's Bank of China to freeze U.S. assets held in China. Which of the statements given above is/are correct?

  1. China's Ministry of Commerce ordered domestic firms not to comply with the U.S. sanctions on the five designated refiners.
  2. China invoked its anti-foreign-sanctions law to enable retaliation against entities enforcing the measures.
  3. China responded by directing the People's Bank of China to freeze U.S. assets held in China.
  • A. 1 only
  • B. 1 and 2 only
  • C. 2 and 3 only
  • D. 1, 2 and 3

Q12. India's development and operation of the Shahid Beheshti terminal at Iran's Chabahar port — which has relied on a specific carve-out from U.S. Iran sanctions — is operationalised by an Indian entity functioning under which Union Ministry?

  • A. Ministry of Ports, Shipping and Waterways
  • B. Ministry of External Affairs
  • C. Ministry of Petroleum and Natural Gas
  • D. Ministry of Commerce and Industry