The Trump administration said on Friday it had imposed sanctions on an independent “teapot” refinery in China for buying billions of dollars’ worth of Iranian oil, as Washington and Tehran head into another round of peace talks over the weekend.
The Treasury Department targeted Hengli Petrochemical (Dalian) Refinery, which it said is one of Iran’s largest customers of crude oil and petroleum products. The department’s Office of Foreign Assets Control said it also imposed sanctions on about 40 shipping companies and vessels that operate as part of Iran’s shadow fleet.
China has said it opposes “illegal” unilateral sanctions.
On Friday, its embassy in Washington said normal trade should not be harmed and called on Washington to stop “abusing” sanctions to target Chinese companies.
“We call on the US to stop politicizing trade and sci-tech issues and using them as a weapon and a tool and stop abusing various kinds of sanction to hit Chinese companies,” a spokesperson for the Chinese embassy said in a statement.
The Trump administration last year imposed sanctions on teapots Hebei Xinhai Chemical Group, Shandong Shouguang Luqing Petrochemical, and Shandong Shengxing Chemical.
That created some hurdles for the refiners, including difficulties receiving crude and having to sell refined products under different names. Teapots account for a quarter of Chinese refinery capacity, operate on narrow, sometimes negative, margins, and have recently been squeezed by tepid domestic demand.
The US sanctions, which freeze the US assets of designated individuals and prevent Americans from doing business with them, have deterred some larger independent refiners from buying Iranian oil. China buys more than 80% of Iran’s oil that is shipped, according to 2025 data from the analytics firm Kpler.
Sanctions experts have long said, however, that independent refineries are somewhat immune to the full effects of US sanctions because they have little exposure to the US financial system. Imposing sanctions on Chinese banks that facilitate the purchases would have a greater effect on Iranian oil purchases, they say.
Treasury Secretary Scott Bessent said the US is imposing a “financial stranglehold” on the Iranian government. “Treasury will continue to constrict the network of vessels, intermediaries, and buyers Iran relies on to move its oil to global markets,” Bessent said.
Bessent told reporters at the White House on April 15 that the Treasury has written to two Chinese banks and “told them that if we can prove that there is Iranian money flowing through your accounts, then we are willing to put on secondary sanctions.”
The teapot refiners have recently had to pay premiums over international Brent oil prices to buy Iranian oil after Washington’s temporary waiver of sanctions on Iranian oil at sea raised expectations that India might buy more of the oil. Last week, the US allowed the waiver to expire.
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