The U.S. Department of the Treasury's Office of Foreign Assets Control imposed sanctions Friday on Hengli Petrochemical (Dalian) Refinery Co., Ltd., China's second-largest independent "teapot" refinery, for purchasing billions of dollars' worth of Iranian crude oil and petroleum products. The refinery, located in Dalian, has been one of Iran's largest customers and received shipments from Iran's shadow fleet vessels, including over five million barrels from ships like BIG MAG, GALE, and ARES since at least 2023.

Hengli also bought oil from Sepehr Energy Jahan Nama Pars Company, the sales arm of Iran's Armed Forces General Staff, generating hundreds of millions of dollars for the Iranian military. The sanctions block any U.S. assets of the designated entities and bar Americans from dealing with them. This marks the fourth Chinese teapot refinery targeted in the campaign, following Hebei Xinhai Chemical Group, Shandong Shouguang Luqing Petrochemical, and Shandong Shengxing Chemical.

Treasury also designated 19 shadow fleet vessels and 19 associated shipping companies for transporting billions of dollars in Iranian petroleum products to markets in Asia, including China. Vessels like COVENIO shipped more than six million barrels of Iranian oil to China since early 2025, while SEEKER 8 delivered over four million barrels in January and February 2026. The companies, based in Hong Kong, the Marshall Islands, China, Vietnam, and elsewhere, own or manage these tankers flagged under Panama, Hong Kong, and other jurisdictions.

"Economic Fury is imposing a financial stranglehold on the Iranian regime, hampering its aggression in the Middle East, and helping to curtail its nuclear ambitions," Treasury Secretary Scott Bessent said. "At President Trump’s direction, Treasury will continue to constrict the network of vessels, intermediaries, and buyers Iran relies on to move its oil to global markets."

The actions fall under Executive Order 13902 and National Security Presidential Memorandum 2, part of a maximum pressure campaign launched after February 2025 that has sanctioned over 1,000 Iran-related targets. Teapot refineries process about a quarter of China's crude and have sustained Iran's oil exports despite U.S. restrictions, with China buying more than 80% of Iran's seaborne oil.

Iran uses oil revenue to fund proxy militias, regional destabilization, and its nuclear program, according to U.S. officials. The sanctions come amid heightened U.S. enforcement, including warnings to Chinese banks about secondary sanctions. No immediate response came from Hengli or Beijing.