The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued a statement on Tuesday (April 28th), warning financial institutions of the sanctions risks associated with conducting business with Chinese “teapot” refineries, primarily located in Shandong Province. These Chinese refineries are accused of ongoing imports and processing of Iranian oil. The U.S. aims to increase pressure on Iran with this move.
The Treasury Department stated that China purchases approximately 90% of Iran’s oil exports, with Chinese “teapot” refineries being significant buyers of this oil.
“These revenues ultimately benefit the Iranian regime, its weapons programs, and military,” the Treasury Department said. “Some Chinese ‘teapot’ refineries conduct U.S. dollar transactions and purchase U.S. goods using the U.S. financial system.”
Since March 2025, the Treasury Department has sanctioned multiple “teapot” refineries, which collectively have purchased and refined billions of dollars worth of Iranian oil.
The Treasury Department urges financial institutions to take measures to ensure they do not facilitate any transactions for “teapot” refineries that may potentially involve importing Iranian oil, as these institutions could face sanctions. Additionally, financial institutions should carefully scrutinize any transactions involving “teapot” refineries, especially those located in Shandong Province, as they are more likely to be involved in Iranian oil trade.
“Financial institutions should be aware that the Treasury Department is utilizing all available tools and authorities and is prepared to implement secondary sanctions on foreign financial institutions that continue to support Iranian activities,” the Treasury Department stated.
The Trump administration is currently intensifying its “maximum pressure” campaign on Iran. Last Friday (April 24th), the Treasury Department imposed sanctions related to Iran, including the China-based “Hengli Petrochemical (Dalian) Refinery Co., Ltd.” and around 40 shipping companies and Iranian shadow fleet vessels.
On Tuesday (April 28th), the U.S. Treasury Department announced sanctions on 35 entities and individuals involved in Iran’s shadow banking system, assisting in the transfer of billions of dollars related to sanctions evasion and other illicit activities.
The Treasury Department stated that the sanctions taken on Tuesday exposed and targeted mechanisms through which the Iranian regime collects payments for oil and other commodities, raising the costs for the regime’s destabilizing activities and reducing its associated revenues. It also exposed individuals aiding the regime in abusing the international financial system.