Laden crude oil tanker approaches the port of Qingdao, China in the morning fog. Photo credit: Shutterstock/Igor Grochev

Photo credit: Shutterstock/Igor Grochev

U.S. Sanctions Chinese Port Operators, Teapot Refinery Over Iranian Oil Shipments

Mike Schuler
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May 8, 2025

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced today a significant expansion of sanctions targeting Iran’s oil export operations, marking its first action against terminal operators in China’s Shandong Province.

The sanctions focus on Hebei Xinhai Chemical Group Co., Ltd., a so-called Chinese “teapot” refinery, and three port terminal operators in Shandong Province. These independent facilities have been involved in purchasing and facilitating the delivery of Iranian oil worth hundreds of millions of dollars.

The action represents OFAC’s third enforcement against a teapot refinery and its first targeting terminal operators in Shandong Province, signaling an escalation in efforts to disrupt Iran’s oil export capabilities.

Treasury Secretary Scott Bessent underscored the administration’s commitment to maintaining pressure on Iran’s oil supply chain. “The United States remains resolved to intensify pressure on all elements of Iran’s oil supply chain to prevent the regime from generating revenue to further its destabilizing agenda,” said Bessent.

The action specifically targets Iran’s “shadow fleet,” which relies on obscure ship management companies to mask petroleum shipments to China through ship-to-ship (STS) transfers. Several vessels have been identified in this operation, including the Panama-flagged STAR TWINKLE 6, LAMD, SKADI, and BIG MAG, the Sao Tome and Principe-flagged IMPALAS, and the San Marino-flagged THANE.

According to OFAC, the STAR TWINKLE 6 alone has transported millions of barrels of Iranian oil to China since mid-2024, including transfers with the sanctioned vessel SERENE I. The LAMD has moved approximately eight million barrels of Iranian oil to various Chinese locations in the same period.

The sanctions also extend to key infrastructure players. Baogang (Dongying Donggang) Logistics and Warehousing Co., Ltd., which controls Shandong Jingang Port Co., Ltd., operates a terminal at Dongying Port that has received over one million barrels of Iranian oil from shadow fleet vessels CORONA FUN and VIOLA.

In an unprecedented move, OFAC has also designated two Indian vessel captains, Ketan Agarwal and Lincoln Francisco Viegas, for their roles in operating sanctioned shadow fleet vessels. Agarwal has been involved in Iranian oil transport since 2017, while Viegas has operated two vessels since 2022.

The sanctions’ implications are significant for the maritime industry. All property and interests of the designated entities within U.S. jurisdiction are blocked and must be reported to OFAC. Additionally, entities owned 50 percent or more by blocked persons are also affected.

OFAC warns that violations may result in civil or criminal penalties for both U.S. and foreign persons. Financial institutions and other entities risk exposure to sanctions for engaging in transactions with designated entities or blocked persons.

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