Trump Sanctions First Chinese Refinery and Tankers in Iranian Oil Trade
The U.S. State Department and Treasury working concurrently launched the next round of sanctions targeting Iran’s oil trade. In addition to listing additional tankers and their operators, the U.S. made its first designation of a so-called “teapot refinery” in China as well as the operator of a Chinese oil terminal for buying and storing Iranian crude oil from sanctioned vessels.
“Teapot” refiners according to the U.S. Department of State are private Chinese refineries that are the primary purchasers of Iranian oil. It noted that China is by far the largest importer of Iranian oil saying that these sanctions are “being imposed pursuant to President Trump’s maximum pressure campaign to drive Iran’s oil exports, including to China, to zero.”
The U.S. asserted that Shandong Shouguang Luqing Petrochemical Co. in Shandong Province, China was identified in mid-2022 as a buyer of Iranian oil associated with the Iranian military and Iranian military forces.
It reports that Luqing Petrochemical has purchased millions of barrels of Iranian oil worth approximately half a billion dollars. The oil was transported by shadow fleet vessels, some of which have been sanctioned for their role in transporting Iranian petroleum linked to the Houthis. It specifically identified the tankers Mehle (Panama flag) and Kohana (renamed Limas and sailing under the flag of Guyana) which were sanctioned by the Biden administration in January 2024 as transporting oil to the refinery.
The U.S. Department of State today also designated Huaying Huizhou Daya Bay Petrochemical Terminal Storage, an oil terminal in China. It is reported to be buying and storing Iranian crude oil from a sanctioned vessel.
The tanker listing was expanded with eight more vessels that the U.S. reports are transporting Iranian oil to teapot refineries and usually engaging in deceptive shipping practices, including automatic identification system (AIS) manipulation. The Office of Foreign Assets Control (OFAC) sanctioning the vessels Natalina 7 (Comoros-flagged), Catalina 7, Aurora Riley and Viola (each Panama-flagged), Montrose (San Marino-flagged), Volans and Brava Lake (each Barbados-flagged), and Titan (currently unflagged).
The U.S. is linking some of the oil transactions to supplying funds to the Houthi militants in Yemen that are backed by Iran. Other transactions are reported to have funded the Iranian Ministry of Defense of Armed Forces Logistics (MODAFL).
OFAC in total imposed sanctions on 19 entities and vessels. It also included shipping companies and operators incorporated in Hong Kong, Liberia, China, the Seychelles, Panama, and the British Virgin Islands.
Trump issued a National Security Presidential Memorandum 2 on February 4 ordering a campaign of maximum pressure on Iran. Since then, the State Department has announced sanctions on networks funding Iran, oil traders, tankers, and Iran’s recently appointed Oil Minister. Over the weekend, Trump also launched a new bombing campaign against the Houthis citing their 2024 attacks against merchant shipping.