US targets China refinery in sweeping Iran oil crackdown, sanctions ‘shadow fleet’ tankers

The U.S. Treasury’s Office of Foreign Assets Control (OFAC) on Friday sanctioned a major Chinese oil refinery and dozens of ships tied to Iran’s “shadow fleet,” escalating efforts to choke off Tehran’s main source of revenue.

Officials said in a press release that the move targets Hengli Petrochemical, one of Iran’s largest oil buyers, along with a network of shipping companies and tankers responsible for transporting billions of dollars’ worth of petroleum products to foreign markets. The Treasury Department identified these “shadow fleet” vessels as the financial lifeline for Iran’s “unstable regime.”

The crackdown is part of “Economic Fury,” a broader campaign to squeeze Iran’s economy by limiting its ability to sell oil abroad, revenue the U.S. says funds the regime’s military and destabilizing activities across the Middle East.

“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.

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An oil tanker is seen near the terminal at Kharg Island, Iran, as U.S. officials and analysts consider whether seizing the island could significantly impact Iran’s oil exports. (Ali Mohammadi/Bloomberg via Getty Images)

Hengli Petrochemical (Dalian) Refinery Co. is a China-based “teapot” refinery, a term used for independent facilities known for purchasing discounted crude, including from sanctioned countries.

The refinery, one of China’s largest independent facilities, has received Iranian oil cargoes from sanctioned shadow fleet vessels since at least 2023. Hengli has also purchased oil tied to Iran’s armed forces, generating hundreds of millions of dollars for the Iranian military.

Hengli has also received shipments tied to Sepehr Energy Jahan Nama Pars Company, a firm identified by U.S. officials as a front for Iran’s armed forces that helps facilitate oil sales abroad. The company operates on behalf of Iran’s Armed Forces General Staff, using a network of intermediaries and vessels to move sanctioned crude, with proceeds helping fund the country’s military programs and regional proxy groups.

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The Iranian-flagged Touska cargo ship pours smoke out after U.S. forces launched missiles at it’s control room following its violation of the U.S. blockade in the Strait of Hormuz. 4/20/26. U.S. Central Command (CENTCOM) (U.S. Central Command (CENTCOM))

The new sanctions also target the network that makes these oil sales possible, a “shadow fleet” of aging tankers and shell companies that move petroleum across global markets while evading sanctions and obscuring the origin of shipments.

These ships avoid detection by transferring cargo from one tanker to another in the open ocean. Treasury officials said 19 vessels were targeted in the action.

A U.S. military helicopter hovers over the sanctioned stateless crude oil tanker M/T Tifani during an interdiction on April 21, 2026. (Department of War)

The move is part of the Trump administration’s renewed “maximum pressure” campaign against Iran, aimed at cutting off the regime’s primary source of revenue through oil exports and sanctions enforcement.

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U.S. officials say oil exports remain the backbone of Iran’s economy, and efforts to restrict those flows are designed to limit the government’s ability to fund its military, support proxy groups and advance its nuclear program.

Treasury officials warned that additional sanctions are likely as the U.S. continues targeting the networks, intermediaries and buyers that enable Iran to move oil on the global market.