The United States government has intensified pressure on Tehran by imposing sanctions on 35 entities and individuals involved in Iran's shadow banking sector. The Treasury Department's Office of Foreign Assets Control (OFAC) also issued a warning to banks conducting business with Chinese 'teapot' refineries, which are accused of paying tolls for passage through the Strait of Hormuz.
Sanctions Target Illicit Financial Networks
OFAC stated that the designated individuals and firms facilitated the movement of tens of billions of dollars linked to sanctions evasion and Iran's sponsorship of terrorism. The sanctions aim to disrupt mechanisms used by Tehran to receive payment for oil and other commodities, thereby reducing its revenue.
Treasury Secretary Scott Bessent said in a statement: 'Iran's shadow banking system serves as a critical financial lifeline for its armed forces, enabling activities that disrupt global trade and fuel violence across the Middle East. Illicit funds funneled through this network support the regime's ongoing terrorist operations, posing a direct threat to U.S. personnel, regional allies, and the global economy.' He added that any institution facilitating or engaging with these networks risks 'severe consequences.'
Focus on Chinese 'Teapot' Refineries
OFAC specifically warned banks against doing business with firms that pay the Iranian government or the Islamic Revolutionary Guard Corps (IRGC) for passage through the Strait of Hormuz, citing significant sanctions risk. The warning singled out independent Chinese teapot refineries, mainly in Shandong province, due to their role in importing and refining Iranian oil. Some of these refineries have used the U.S. financial system for dollar transactions and to procure U.S. goods.
China has opposed what it calls 'illegal' unilateral sanctions. Despite this, the U.S. has already imposed sanctions on five Chinese teapot refineries, including Hengli Petrochemical (Dalian) Refinery, one of Iran's largest customers of crude oil and petroleum products.
Broader Campaign of Maximum Pressure
Since February 2025, OFAC has imposed sanctions on approximately 1,000 Iran-related individuals, vessels, and aircraft as part of a campaign to exert maximum economic pressure against Iran's shadow banking, money laundering, and sanctions evasion networks. Iranian banks cut off from Western financial systems rely on private companies known as rahbars, which manage thousands of shell companies overseas to execute payments for Iranian imports and exports.
The companies hit with sanctions include Farab Soroush Afagh Qeshm Company, which OFAC said works with Iran's Shahr Bank to enable Iranian oil sales, along with two of its senior executives. OFAC also designated several rahbar companies that work with Bank Sina, controlled by Iran's supreme leader, and the military-affiliated Bank Sepah, which has funded Iran's ballistic missile program.
Additionally, OFAC designated two companies, Nix Energy and Tai Lung Trading, used to transfer millions of dollars on behalf of previously sanctioned Iranian individuals.
Strait of Hormuz Toll Warning
In a separate alert, Treasury underscored that no payments to Iran or the IRGC for safe passage through the Strait of Hormuz would be authorized for U.S. persons or institutions. Foreign financial institutions 'risk exposure to sanctions' for engaging in transactions with anyone paying such tolls.
The Trump administration has already imposed sanctions on five Chinese teapot refineries, deterring some larger independent refiners from buying Iranian oil. China buys more than 80% of Iran's shipped oil, according to 2025 data from analytics firm Kpler.
Expert Reactions
Brett Erickson, managing principal at Obsidian Risk Advisors, criticized the approach, saying: 'Washington keeps talking about waging a maximum pressure campaign, but it is still avoiding the one move that would actually matter. If you are not willing to target the Chinese banks propping up the regime in Tehran, you are not going for the jugular, you are running a charade.'
Efforts to end the two-month Iran war remained at an impasse on Tuesday, with U.S. President Donald Trump unhappy at the latest plan from Tehran that proposed setting aside discussion of its nuclear program until the conflict was concluded and shipping disputes were resolved.
