This photo taken on March 26, 2026 shows an oil tanker unloading crude at a port in Yantai in China’s eastern Shandong province.
CN-STR | AFP | getty images
The US Treasury warned financial institutions on Tuesday that they could face sanctions if they engage in transactions with Chinese refineries that process Iranian oil.
Treasury urged financial institutions in a statement To avoid facilitating transactions involving independent refineries, known as “teapots”, that import Iranian oil, as such transactions could expose them to sanctions.
Treasury said China buys about 90% of Iran’s oil exports, with Teapot refineries accounting for most of the imports.
“This revenue ultimately benefits the Iranian regime, its weapons programs, and its military. Some Chinese teapot refiners have used the U.S. financial system to conduct dollar-denominated transactions and purchase American goods,” Treasury said.
It also called on institutions to “enhance due diligence” on transactions involving China-based refineries, particularly in Shandong province, and other Asia and Middle East-based entities involved in Iran’s oil supply chain to China.
US Treasury Secretary Scott Besant said on x That Treasury “will continue to apply maximum pressure and risk U.S. sanctions against any individual, vessel, or entity facilitating illicit flows into Tehran.”
Besant said Iran’s main export terminal on Kharg Island is “soon approaching storage capacity”, which could force Tehran to cut production and lead to a loss of about $170 million in daily revenue.
‘Malaysian mix’
The move comes as Washington aims to cut off revenue streams to Iran under the “maximum pressure” campaign imposed by US President Donald Trump. in FebruaryA few weeks before the start of the war with Iran.
Last week, the US sanctioned the Hengli Petrochemical (Dalian) Refinery, one of China’s largest teapot refineries, calling it one of Iran’s biggest customers of crude oil and petroleum products.
Four other teapot refineries have also been approved. Treasury also expanded the dragnet to include port terminal operators in Shandong province and logistics service providers associated with Iranian oil shipments.
Iranian crude oil is typically transported to Chinese teapot refineries using “shadow fleets” of tankers, which are sanctioned vessels that manipulate their location data to avoid detection.
Many shipments involve multiple ship-to-ship transfers, sometimes to obscure their origin, using scrapped ships that are no longer in operation, often in the Persian Gulf or the Strait of Malacca.
In some cases, Iranian oil is mixed with supplies from other countries or re-labeled with falsified documents to conceal its origin, commonly known as ‘Malaysian blending,'” Treasury said.
The warning comes less than a month before Trump’s planned visit to Beijing, where trade and investment are expected to be discussed.
last week, during a meeting Along with Iranian Foreign Minister Abbas Araqchi, China’s Foreign Minister Wang Yi said Beijing opposed “abuse of force and illegal unilateral sanctions”.
Washington and Tehran are currently observing an indefinite ceasefire declared by Trump, although tensions remain high. Iran has not yet reopened the Strait of Hormuz, while the US maintains its blockade of Iranian ports.
— CNBC’s Annick Bao and Evelyn Cheng contributed to this report
