On Tuesday, the Trump administration stepped up economic pressure on Iran, warning financial institutions against allowing independent Chinese refineries to buy Iranian oil and cracking down on Iran’s “shadow” banking sector.
The moves were the latest in the Treasury Department’s “Operation Economic Fury,” which aims to cripple Iran’s economy and force it to agree to a peace deal with the United States. After easing sanctions on Iran last month in hopes of keeping oil flowing in global markets, the Trump administration changed course in recent weeks and announced a series of new sanctions designed to increase pressure on Iran.
“Iran’s shadow banking system serves as a critical financial lifeline for its armed forces and enables activities that disrupt global trade and fuel violence in the Middle East,” Treasury Secretary Scott Bessent said in a statement. “Illicit funds funneled through this network support the regime’s ongoing terrorist operations and pose a direct threat to U.S. personnel, regional allies and the global economy.”
He added: “Any institution that promotes or collaborates with these networks faces the risk of serious consequences.”
Iran uses its shadow banking system to evade Western sanctions. This is a network of private companies that operate international shell companies that accept payments for illegal oil sales. The network also facilitates transactions for weapons components that Iran uses to supply its arsenal.
The sanctions announced Tuesday target 35 companies and individuals monitoring the system.
Separately, the Treasury Department on Tuesday increased pressure on China’s “teapot” refineries, which are among the biggest buyers of Iranian oil. It called on U.S. and international financial institutions to examine transactions with the independent refiners that account for the bulk of China’s purchases of Iranian oil.
“Financial institutions should take steps to ensure that they do not facilitate transactions with certain teapot refineries or other teapot refineries that may import Iranian oil, as doing so could expose the financial institutions to sanctions,” the Treasury Department wrote in the alert.
The Treasury Department last week imposed sanctions on an independent Chinese refinery, Hengli Petrochemical Refinery, which is one of Iran’s largest customers for crude oil and other petroleum products. China buys about 90 percent of Iran’s oil.
Financial institutions that do business with sanctioned refineries could themselves face U.S. sanctions or other penalties.