By Zarak Khan | 2026-05-07

The United States has intensified its sanctions campaign against Iran's oil sector, targeting Chinese firms and individuals involved in enabling Tehran's sanctions evasion network. The move highlights Washington's determination to thwart Beijing from sustaining Iran's illicit oil supply chain.

On May 1, the U.S. Department of State imposed sanctions on several China-based entities "involved in the trade of Iranian petroleum and petroleum products."

The action highlights what U.S. officials describe as a persistent pattern of Chinese commercial actors generating revenue streams to underpin Iran’s regional activities.

"So long as Iran attempts to generate oil revenues to fund its destabilizing activities, the United States will hold both Iran and all its sanctions-evading partners accountable," the department said.

The measures build on a broader policy reset under a White House directive, National Security Presidential Memorandum-2 (NSPM-2), issued in February 2025. It reinstated a "maximum pressure" strategy aimed at curbing Iran's nuclear ambitions, missile development and support for terrorist groups across the Middle East.

Chinese targeted

U.S. officials said the latest designations expose the entities using "sophisticated evasion schemes," including illicit ship-to-ship transfers and the deployment of "dark fleet" vessels employing deceptive shipping practices that pose risks to legitimate maritime commerce.

Among those targeted is Qingdao Haiye Oil Terminal Co. (QINGDAO HAIYE), a China-based petroleum terminal operator that handles large volumes of Iranian-origin crude.

The facility received dozens of shipments in 2025 alone, amounting to tens of millions of barrels of Iranian-origin oil, despite international restrictions, the department said in a May 1 statement.

Situated inside Qingdao Port in Shandong province, China, the facility has accepted cargo from multiple vessels involved in illicit ship-to-ship transfers of Iranian-origin crude conducted off the coast of Singapore, particularly in the Eastern Outer Port Limits. U.S. authorities identify that area as a hotspot for covert transfers of Iranian oil, the statement said.

Washington also sanctioned Xinchun Li, the company's president and a Chinese national, "for knowingly engaging in a significant transaction for the purchase, acquisition, sale, transport, or marketing of petroleum or petroleum products from Iran."

It designated two vessel management firms for "their involvement in the transport and purchase of Iranian petroleum products."

The latest sanctions build on earlier actions taken last August, when Washington designated Qingdao Port Haiye Dongjiakou Oil Products Co., another Chinese terminal operator.

U.S. officials said that the facility had "imported at least 65 million barrels of Iranian-origin crude oil transported by numerous shadow fleets since December 2024," much of it transported by vessels already under U.S. sanctions.

At the same time, authorities targeted Yangshan Shengang International Petroleum Storage and Transportation Co., based in Zhejiang province, China.

The company was involved in receiving shipments from sanctioned tankers, including the Turaco, which delivered more than 500,000 barrels of Iranian crude linked to the National Iranian Oil Co.

The sanctions will "criminalize any transactions involving the United States through the terminal operator, part of the major maritime hub of Qingdao on the Yellow Sea," said the Defense Post in its May 3 analysis.

Pressure intensifies

Separately, the U.S. Treasury Department has escalated its campaign under Operation Economic Fury, a broader effort to choke off Iran's financial and oil revenues and disrupt weapon procurement.

The initiative combines sanctions with maritime enforcement measures targeting vessels, such as the Touska and Tifani, that Washington suspects of smuggling Iranian oil.

On May 1, the Treasury sanctioned three Iranian foreign exchange firms and associated networks for their role in facilitating covert financial flows tied to oil sales.

These designations build on its previous actions "targeting Iran's shadow banking mechanisms, including exchange houses, Iranian bank rahbar companies, and digital asset exchanges used to evade sanctions," the department said in a statement.

On April 25, it sanctioned 19 "shadow fleet" vessels, including M/V Sevan, for activities related to "transporting billions of dollars worth of Iranian energy, oil and gas products, including propane and butane, to foreign markets."

On April 24, it sanctioned Hengli Petrochemical (Dalian) Refinery Co., Ltd. (Hengli), a privately owned, independent China-based "teapot" refinery, describing it as a key buyer of Iranian crude worth billions of dollars.

"China-based independent teapot refineries continue to play a vital role in sustaining Iran's oil economy, and Hengli is one of Iran's largest customers for crude oil and other petroleum products," the Treasury said on April 24.

"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," said Treasury Secretary Scott Bessent.

"We will continue to constrict the network of vessels, intermediaries, and buyers Iran relies on to move its oil to global markets," he said.

Any actor involved in such trade risks sanctions, he said.