On April 28, 2026, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued an alert to financial institutions about sanctions risks linked to “teapot” oil refineries in China, in Shandong Province. These refineries are a conduit for Iran’s oil exports—China purchases roughly 90 % of Iran’s crude, and teapots handle most of those imports, funding the Iranian regime. OFAC cautions that some refineries have used the U.S. financial system for dollar transactions and U.S. goods procurement. The alert urges banks to apply risk‑based controls, conduct enhanced due diligence on China‑based refineries, and clearly communicate sanctions compliance expectations. It also highlights evasion tactics, including front companies, intermediary brokers, and a “shadow fleet” that falsifies shipping documents. Since March 2025, OFAC has designated several teapots that have processed billions of dollars of Iranian‑origin oil, and the Treasury may deploy secondary sanctions against foreign institutions that continue to support Iran’s activities.
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