Chinese independent refiners, known as “teapots,” are facing difficulties in securing cheap Iranian crude oil, with some halting purchases entirely, after the U.S. imposed sanctions on two of these refiners in recent months, sources told Reuters.
In March, China’s crude oil imports surged to over 12 million barrels per day (bpd), the highest since August 2023. This increase was driven by a rebound in shipments of Iranian and Russian crude, which had previously dropped due to earlier U.S. sanctions.
However, in March and April, the U.S. sanctioned two small independent Chinese refiners for buying and transporting Iranian oil. These actions were part of the Trump administration’s “maximum pressure” campaign aimed at forcing Iran into nuclear negotiations.
The U.S. State Department sanctioned Huaying Huizhou Daya Bay Petrochemical Terminal Storage in March for purchasing Iranian crude from a sanctioned vessel. At the same time, the U.S. Treasury Department targeted Shandong Shouguang Luqing Petrochemical Co., a “teapot” refinery, for refining hundreds of millions of dollars’ worth of Iranian oil.
In April, the U.S. expanded its sanctions on Iran’s oil industry, adding another independent Chinese refiner to the list. The Treasury Department sanctioned Shandong Shengxing Chemical Co. for purchasing over a billion dollars’ worth of Iranian crude oil, some of it linked to Iran’s Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF).
These sanctions have created significant barriers for the sanctioned Chinese refiners to obtain Iranian crude. They have also deterred other teapot refineries, including some larger ones, from continuing to buy oil from Iran. Sources told Reuters that five refineries in Shandong province, home to many of these independents, stopped purchasing Iranian oil in April out of fear they could be next on the U.S. sanctions list.
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