U.S. warns banks of sanctions threat over China ‘teapot’ refineries dealing with Iranian oil

The U.S. Treasury warned monetary establishments Tuesday that they may face sanctions in the event that they interact in dealings with Chinese language refineries that course of Iranian oil.

The Treasury urged monetary establishments in an announcement to keep away from facilitating transactions involving impartial refineries, referred to as “teapots,” that import Iranian oil, as such transactions could expose them to sanctions.

China purchases roughly 90% of Iran’s oil exports, the Treasury famous, with teapot refineries accounting for almost all of those imports.

“This income in the end advantages the Iranian regime, its weapons packages, and its army. Some Chinese language teapot refineries have used the U.S. monetary system to conduct dollar-denominated transactions and procure U.S. items,” the Treasury added.

It additionally known as on establishments to “conduct enhanced due diligence” on transactions involving China-based refineries, notably these in Shandong province, and different Asia-and Center East-based entities concerned in Iran’s oil provide chain to China.

U.S. Treasury Secretary Scott Bessent stated on X that the Treasury “will proceed to exert most strain and any individual, vessel, or entity facilitating illicit flows to Tehran dangers publicity to U.S. sanctions.”

Bessent stated Iran’s most important export terminal on Kharg Island is “quickly nearing storage capability,” which might pressure Tehran to chop manufacturing and lose about $170 million in each day income.

The transfer comes as Washington goals to chop off income streams to Iran as a part of a “most strain” marketing campaign imposed by U.S. President Donald Trump in February, weeks earlier than the struggle with Iran started.

Final week, the U.S. sanctioned considered one of China’s largest teapot refineries, Hengli Petrochemical (Dalian) Refinery, describing it as considered one of Iran’s largest clients of crude oil ​and petroleum merchandise.

4 different teapot refineries have additionally been sanctioned. The Treasury has additionally expanded the dragnet to incorporate port terminal operators in Shandong Province and logistics companies suppliers linked to Iranian oil shipments.

Iranian crude is often transported to Chinese language teapot refineries utilizing a “shadow fleet” of tankers, that are sanctioned vessels that manipulate their location knowledge to keep away from detection.

Many shipments contain a number of ship-to-ship transfers, typically utilizing scrapped vessels which can be now not in operation, usually within the Persian Gulf or the Strait of Malacca, to obscure their origins.

In some instances, Iranian oil is mixed with provides from different nations or relabeled with solid paperwork to additional disguise its origins, mostly referred to as ‘Malaysian mix,'” the Treasury stated.

The warning comes lower than a month earlier than a deliberate go to by Trump to Beijing, the place commerce and funding are anticipated to be mentioned.

Final week, throughout a gathering with Iranian Overseas Minister Abbas Araqchi, China’s Overseas Minister Wang Yi stated that Beijing opposed the “abuse of pressure and unlawful unilateral sanctions.”

Washington and Tehran are at the moment observing an indefinite ceasefire introduced by Trump, although tensions stay excessive. Iran has but to reopen the Strait of Hormuz, whereas the U.S. has maintained its blockade of Iranian ports.

— CNBC’s Anniek Bao and Evelyn Cheng contributed to this report