U.S. treasury sanctions Chinese refinery and maritime network over Iranian oil trade

The U.S. Department of the Treasury escalated its crackdown on Iran oil trade on Wednesday, targeting China-based Shandong Shengxing Chemical Co., Ltd. and a network of maritime entities for facilitating billions in Iranian crude oil transactions.

Treasury Secretary Scott Bessent warned, “any refinery, company, or broker that chooses to purchase Iranian oil or facilitate Iran oil trade places itself at serious risk,” underscoring Washington’s resolve to disrupt Tehran’s revenue streams funding “terrorist proxies and partners.”

Shandong Shengxing, an independent “teapot” refinery in Shandong Province, purchased over $1 billion in Iranian crude oil between 2020 and 2023, including shipments from China Oil and Petroleum Company Limited (COPC), a front company for Iran’s Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF).

Treasury revealed that COPC laundered $108 million through the U.S. financial system—funds later seized by the Justice Department.

The refinery reliance on sanctioned “shadow fleet” tankers like the Nyantara and Reston further exposed its ties to illicit Iranian oil networks.

The sanctions also spotlighted Iran sprawling maritime evasion tactics.

Five vessels—Reston, Bestla, Egret, Nyantara, and Rani—were identified as key players in ship-to-ship transfers of Iranian oil, often involving previously sanctioned tankers.

For instance, Reston received over one million barrels of Iranian crude in early 2025 from the Wenyao and Fiona, both blacklisted in 2024.

Similarly, the Bestla sourced oil from the Atila, a vessel linked to Iran military front company Sepehr Energy.

Ownership of these tankers traced back to a web of shell companies, including Panama-based Oceanic Orbit Incorporated and Malaysia’s Pro Mission SDN BHD.

Treasury sanctioned six entities managing the shadow fleet, freezing their U.S.-linked assets and prohibiting American entities from transacting with them.

Secretary Bessent reiterated that the campaign aims to “bring about a positive change in behaviour,” though violations could trigger strict civil or criminal penalties.

The updated OFAC advisory, issued concurrently, warns global shipping firms to scrutinise Iranian oil shipments disguised through opaque transfers.

Today’s action marks the sixth round of sanctions under the Biden administration “maximum pressure” strategy, signaling unwavering scrutiny over Iran petroleum sector and its enablers.

The Treasury reiterated that sanctions aim to compel behavioural change, noting that delisting remains possible for entities demonstrating compliance with international norms.