The U.S. Treasury, on Tuesday, warned banks of sanctions if they support transactions with Chinese “teapot” refineries importing Iranian oil, saying the funds aid Iran’s regime, military, and weapons programs.
The Department noted that China buys about 90% of Iran’s oil exports, with these independent refineries handling most of those purchases. Some Chinese teapot refineries have also utilized the U.S. financial system to carry out dollar-denominated transactions and acquire U.S. goods, the department said.
Institutions were also urged to “conduct enhanced due diligence” on transactions involving China-based refineries, especially those in Shandong province, as well as other entities across Asia and the Middle East linked to Iran’s oil supply chain to China. The Treasury also cautioned that Iranian oil is sometimes mixed with other countries’ supplies or relabeled with fake documents, often marketed as “Malaysian blend,” to hide its origin.
Bessent Flags Iran’s Loss
U.S. Treasury Secretary Scott Bessent stated that the Treasury “will continue to exert maximum pressure and any person, vessel, or entity facilitating illicit flows to Tehran risks exposure to U.S. sanctions.”
Bessent added that Iran’s Kharg Island is nearing full storage capacity, which could force the country to cut oil production, leading to about $170 million in daily revenue losses and risking lasting damage to its oil infrastructure.
US Ramps Up Iran Oil Crackdown
Earlier this month, the Treasury Department launched Operation “Economic Fury” against Iran, which includes the blockade of Iranian ports and the Strait of Hormuz, as part of an effort to increase economic pressure on the Iranian government. The operation also targets Iran’s illicit money trail sponsoring its terrorist activities, the Treasury warned.
Last week, the U.S. sanctioned major Chinese teapot refinery Hengli Petrochemical and four others for buying Iranian oil, while also targeting Shandong port operators and logistics firms. Iranian crude is often shipped to these refineries via a “shadow fleet” of tankers that evade detection by manipulating location data.
Previously, President Donald Trump cautioned China of “big problems” if it supplies Iran with air defense systems following reports from U.S. intelligence about Beijing’s plan to send MANPAD anti-air missile systems via third parties to Tehran.
The U.S. and Iran are currently in an indefinite ceasefire announced by Trump, but tensions remain elevated. Iran has not reopened the Strait of Hormuz, while the U.S. continues its blockade of Iranian ports.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Image via Shutterstock
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