U.S. Imposes Third Round of Sanctions on Chinese ‘Teapot’ Refineries Importing Iranian Oil

Latest Developments

• Third Round ‘Teapot’ Refinery Sanctions: The U.S. Treasury Department issued sanctions targeting a Chinese “teapot” refinery on May 8 as part of the Trump administration’s “maximum pressure” campaign against Iran’s oil trade. The Treasury sanctioned Hebei Xinhai Chemical Group for “purchasing or facilitating the delivery of hundreds of millions of dollars’ worth of Iranian oil.” The sanctions also targeted three companies operating a terminal at China’s Dongying port, which the Treasury alleged had received several shipments of Iranian oil since 2024.
• Preventing Iran From Generating Revenue: Announcing the new sanctions, Treasury Secretary Scott Bessent stated that the U.S. “remains resolved to intensify pressure on all elements of Iran’s oil supply chain to prevent the regime from generating revenue to further its destabilizing agenda.” As part of the sanctions package, six vessels and two Indian-national ship captains were also designated for transporting Iranian oil as part of Iran’s “shadow fleet.”
• China Objects to U.S. Sanctions: The United States previously sanctioned “teapot” refineries in March and April. Liu Pengyu, spokesman for the Chinese Embassy in Washington, condemned the sanctions, saying that the United States “should stop interfering with and undermining the normal economic and trade cooperation between China and Iran.”

FDD Expert Response

“Trump’s efforts to curb Iran’s oil exports have so far failed, with volumes over the past three months holding steady at around 1.6 million barrels per day. This failure stems from Washington’s limited pressure on buyers, China’s political decision to support Iran, and the Trump administration’s insistence that nuclear negotiations are making progress.” — Saeed Ghasseminejad, Senior Iran and Financial Economics Advisor

“The administration is rightly going after Chinese ‘teapots.’ Chinese state-owned entities have largely divested from Iranian oil refining due to the increased threat posed by U.S. sanctions, but they still maintain significant ties through joint ventures and complex supply chain integration. Without closing off all Iranian oil shipments to Chinese ports, there is little China can do to protect its petrochemical sector from additional sanctions risk. Chinese banks and foreign financial institutions with exposure to China’s petrochemical sector should take note and derisk before they find themselves the subject of U.S. sanctions.” — Max Meizlish, Senior Research Analyst

FDD Background and Analysis

“How to Disrupt the China-Iran Oil Trade,” by Saeed Ghasseminejad and Matthew Zweig

“Maximum Pressure on Tehran Regime in Motion as Trump Builds Negotiating Leverage,” by Janatan Sayeh and Behnam Ben Taleblu

“U.S. Levies Sanctions Against Chinese ‘Teapot’ Oil Refineries for Iranian Oil Purchases,” FDD Flash Brief