March 20, 2025 – Washington, D.C.
The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) has imposed sanctions on a network involved in the purchase, refining, and transport of Iranian crude oil, further tightening economic pressure on Tehran’s petroleum sector. The latest designations target a Chinese “teapot” oil refinery and its CEO, as well as 19 entities and vessels facilitating Iranian oil exports.
Targeting Teapot Refineries and Key Players
OFAC has designated Shandong Shouguang Luqing Petrochemical Co., Ltd (Luqing Petrochemical), a teapot refinery in China’s Shandong Province, for purchasing and refining hundreds of millions of dollars’ worth of Iranian crude oil. The refinery received oil transported by vessels linked to Iran’s Ministry of Defense and Armed Forces Logistics (MODAFL) and the U.S.-designated Foreign Terrorist Organization, Ansarallah (commonly known as the Houthis).
The U.S. has also sanctioned Luqing Petrochemical’s chief executive officer, PRC national Wang Xueqing, under Executive Order (E.O.) 13902 for his role in facilitating these transactions.
Expanding Sanctions on Iran’s Shadow Fleet
A significant part of Iran’s oil trade operates through a “shadow fleet” of vessels that use deceptive practices such as automatic identification system (AIS) manipulation to evade detection. OFAC has designated eight vessels involved in transporting Iranian crude to teapot refineries, including:
- Comoros-flagged: NATALINA 7 (IMO: 9310147)
- Panama-flagged: CATALINA 7 (IMO: 9310159), AURORA RILEY (IMO: 9181649), and VIOLA (IMO: 9254915)
- San Marino-flagged: MONTROSE (IMO: 9281695)
- Barbados-flagged: VOLANS (IMO: 9422988) and BRAVA LAKE (IMO: 9232876)
- Unflagged: TITAN (IMO: 9293741)
Additionally, multiple Hong Kong- and Panama-based entities have been sanctioned for their involvement in managing and operating these vessels. The move aims to disrupt the financing mechanisms that enable Iran’s oil trade, which provides vital revenue for its military and proxy forces.
U.S. Strategy: Maximum Pressure on Iran’s Petroleum Sector
The latest designations follow the directives of National Security Presidential Memorandum 2, issued on February 4, 2025, which escalates the U.S. maximum pressure campaign against Iran’s energy sector. This marks the fourth round of sanctions on Iranian oil sales this year alone.
According to Secretary of the Treasury Scott Bessent, “Teapot refinery purchases of Iranian oil provide the primary economic lifeline for the Iranian regime, the world’s leading state sponsor of terror. The United States is committed to cutting off the revenue streams that enable Tehran’s continued financing of terrorism and development of its nuclear program.”
Legal and Financial Implications
As a result of these sanctions, all U.S.-based assets of the designated persons and entities are blocked, and U.S. persons are generally prohibited from conducting transactions with them. Foreign financial institutions and businesses engaged with sanctioned parties also face secondary sanctions and potential penalties.
OFAC reiterated that violations of U.S. sanctions could result in severe civil and criminal penalties. Financial institutions and businesses involved in transactions with designated entities are urged to assess their risk exposure to avoid punitive measures.
Conclusion
The new wave of sanctions reinforces the Trump administration’s commitment to curtailing Iran’s ability to generate revenue through illicit oil sales. By targeting a broad network of refineries, shipping companies, and financial facilitators, the U.S. aims to tighten economic restrictions on Tehran, pressuring it to curb its regional activities and nuclear ambitions.
