U.S. warns banks of sanctions risk over China ‘teapot’ refineries handling Iranian oil

the u.s. treasury warned banks tuesday they could face sanctions for dealing with chinese "teapot" refineries that process iranian oil. china buys about 90% of iran's oil exports, and these independent refineries handle most of it. treasury secretary scott bessent said on x that anyone facilitating illicit flows to tehran "risks exposure to u.s. sanctions." he claimed iran's main export terminal on kharg island is "soon nearing storage capacity," which could force tehran to lose about $170 million in daily revenue. the treasury also called for "enhanced due diligence" on transactions involving refineries in shandong province. last week, the u.s. sanctioned hengli petrochemical, one of china's largest teapot refineries, calling it one of iran's biggest crude customers. four other teapot refineries have also been hit. the treasury said iranian oil is often moved by a "shadow fleet" of tankers that fake their location, with multiple ship-to-ship transfers and forged documents to disguise origins — commonly labeled "malaysian blend." the warning comes less than a month before trump's planned visit to beijing.