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This photo taken on March 26, 2026 shows an oil tanker unloading crude at a port in Yantai in China’s eastern Shandong province. <\/p>\n
CN-STR | AFP | getty images<\/p>\n<\/div>\n<\/div>\n<\/div>\n
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. <\/p>\n
Treasury urged financial institutions in a statement<\/a> To avoid facilitating transactions involving independent refineries, known as “teapots”, that import Iranian oil, as such transactions could expose them to sanctions.<\/p>\n Treasury said China buys about 90% of Iran’s oil exports, with Teapot refineries accounting for most of the imports. <\/p>\n “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.<\/p>\n<\/div>\n 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.<\/p>\n US Treasury Secretary Scott Besant said on x<\/a> That Treasury “will continue to apply maximum pressure and risk U.S. sanctions against any individual, vessel, or entity facilitating illicit flows into Tehran.”<\/p>\n 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.<\/p>\n<\/div>\n 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 February<\/a>A few weeks before the start of the war with Iran.<\/p>\n 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.<\/p>\n 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.<\/p>\n 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.<\/p>\n<\/div>\n 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.<\/p>\n 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.<\/p>\n The warning comes less than a month before Trump’s planned visit to Beijing, where trade and investment are expected to be discussed.<\/p>\n‘Malaysian mix’<\/h2>\n