U.S. Treasury Sanctions Major Chinese Refinery and Shadow Fleet Vessels in Latest Iran Oil Crackdown

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) has imposed sanctions on China-based Shandong Shengxing Chemical Co., Ltd., an independent “teapot” refinery, for purchasing over $1 billion worth of Iranian crude oil, marking a significant escalation in efforts to disrupt Iran’s petroleum trade.

The sanctions, issued under Executive Order 13902, represent OFAC’s sixth round of enforcement actions targeting Iranian oil sales since President Trump reimposed “maximum pressure” on the Iranian regime in February and the second against a “teapot” refinery.

“Any refinery, company, or broker that chooses to purchase Iranian oil or facilitate Iran’s oil trade places itself at serious risk,” Treasury Secretary Scott Bessent warned. “The United States is committed to disrupting all actors providing support to Iran’s oil supply chain, which the regime uses to support its terrorist proxies and partners.”

The investigation revealed that between March 2020 and January 2023, Shandong Shengxing transferred more than $800 million to China Oil and Petroleum Company Limited (COPC), an IRGC-QF front company. COPC was found to have laundered billions through the U.S. financial system, with $108 million subsequently seized by the U.S. Justice Department.

The sanctions also target several vessels involved in Iran’s “shadow fleet” operations, including the Cameroon-flagged RESTON and Panama-flagged vessels BESTLA, EGRET, NYANTARA, and RANI. OFAC alleges these vessels have collectively shipped billions of dollars worth of Iranian oil to Chinese refineries.

In early 2025, the RESTON received over one million barrels of Iranian oil through ship-to-ship transfers from previously sanctioned vessels. Similarly, the BESTLA obtained approximately two million barrels through transfers from the sanctioned vessel ATILA.

The Treasury Department has also targeted the vessels’ ownership structure, sanctioning multiple companies including Panama-based Oceanic Orbit Incorporated, Malaysia-based Pro Mission SDN BHD, and Marshall Islands-based Bestla Company Limited.

Under these sanctions, all U.S.-based property and interests in property of the designated entities are blocked and must be reported to OFAC. The measures also prohibit U.S. persons from engaging in transactions involving the sanctioned entities.

OFAC has simultaneously issued an updated advisory to help the global shipping and maritime industry identify and avoid sanctions evasion practices related to Iranian petroleum products.

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