US Cracks Down on Iranian Oil, Chinese "Teapot" Refineries
Not a crackpot proposition, but a crack-the-pot policy
Cracking the Chinese Teapots
In its latest effort to disrupt Iran’s exports, the United States has imposed a fourth round of sanctions against the Islamic Republic’s oil industry.
Earlier this month, the U.S. Treasury Department targeted a series of vessels belonging to the vast shadow fleet used by Iran to disguise its energy transports to China—a trade network estimated to be worth billions of dollars. Among these were ships registered in Iran, Hong Kong, the Seychelles, Liberia, Panama, and San Marino.
Now, the U.S. has taken it a step further with a first-time designation of what is colloquially known as a Chinese ‘teapot’; an independent refinery that purchases and processes Iranian crude oil. The company, China-based Shandong Shouguang Luqing Petrochemical Co., Ltd., had already been on the Treasury Department’s sanctioned entity list since 2022.
Additionally, the U.S. will sanction two vessels from Panama and Barbados, as well as a Chinese shipping terminal.
See also: Could Iran's Regime Fall by 2029?
Effectiveness
China is the largest importer of Iranian oil, importing 1.43 million barrels per day in February 2025. While the sanctions will momentarily curb the oil imports, the industry is expected to continue operations once companies re-adjust their business structures through methods like switching up payment entities.
Although CCP-run China does not recognize American sanctions, oil companies run by the Chinese state had already stopped purchasing Iranian oil directly to avoid sanctions. This had given rise to the Chinese teapot refineries which have limited exposure to the U.S. financial system.
The Chinese-Iranian oil trade has since largely de-dollarized, using yuan for transactions and operating through a complicated network of middlemen that avoid U.S. jurisdictions and regulators.
Nuclear Motivations
China is the largest importer of Iranian oil, importing 1.43 million barrels per day in February 2025. While the sanctions will momentarily curb the oil imports, the industry is expected to continue operations once companies re-adjust their business structures through methods like switching up payment entities.
Although CCP-run China does not recognize American sanctions, oil companies run by the Chinese state had already stopped purchasing Iranian oil directly to avoid sanctions. This had given rise to the Chinese teapot refineries which have limited exposure to the U.S. financial system.
The Chinese-Iranian oil trade has since largely de-dollarized, using yuan for transactions and operating through a complicated network of middlemen that avoid U.S. jurisdictions and regulators.