U.S. Targets Chinese Port Operators and Teapot Refinery in Response to Iranian Oil Trade

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) has just ramped up its sanctions against Iran’s oil exports, taking a notable step by targeting terminal operators in Shandong Province, China. This marks a fresh approach as they focus on Hebei Xinhai Chemical Group Co., ltd., known as a “teapot” refinery, along with three port terminal operators in the region. These self-reliant facilities have been instrumental in acquiring and delivering Iranian oil valued at hundreds of millions.

This latest move is OFAC’s third crackdown on teapot refineries and its inaugural action against terminal operators in Shandong, highlighting an intensified effort to undermine iran’s oil export operations. treasury Secretary Scott Bessent emphasized the U.S.’s determination to keep pressure on Iran’s oil supply chain: “We are committed to tightening the screws on all aspects of Iran’s oil trade to hinder their ability to fund destabilizing activities,” he stated.

A key target is what’s referred to as Iran’s “shadow fleet,” which employs obscure ship management firms for discreet petroleum shipments to China via ship-to-ship transfers. Notable vessels involved include Panama-flagged ships like STAR TWINKLE 6 and LAMD, among others from sao Tome and Principe and San Marino.

Since mid-2024, STAR TWINKLE 6 has reportedly delivered millions of barrels of Iranian crude into Chinese ports, often alongside sanctioned vessels like SERENE I. Similarly, LAMD has transported around eight million barrels during this timeframe.

The sanctions also impact significant players within infrastructure sectors. As an example, Baogang (Dongying Donggang) Logistics manages a terminal at Dongying Port that has received over one million barrels from shadow fleet ships such as CORONA FUN and VIOLA.

In an unusual twist, OFAC designated two Indian captains—Ketan Agarwal and Lincoln Francisco Viegas—for their involvement with these sanctioned vessels; Agarwal has been active since 2017 while Viegas took charge starting in 2022.

These sanctions carry serious consequences for the maritime sector; any assets or interests tied to these entities within U.S. jurisdiction are frozen and must be reported back to OFAC. Moreover,companies that are more than 50% owned by blocked individuals will also face repercussions.

OFAC cautions that violations could lead both U.S.-based individuals and foreign entities into civil or criminal trouble if they engage with designated parties or blocked persons—financial institutions especially need to tread carefully when dealing with these entities.

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