The Trump administration on Tuesday ratcheted up economic pressure on Iran, warning financial institutions not to allow independent Chinese refineries to buy Iranian oil and cracking down on Iran’s “shadow” banking sector.
The measures were the latest actions taken as part of the Treasury Department’s “Operation Economic Fury,” which aims to cripple Iran’s economy and compel it to agree to a peace deal with the United States. After easing sanctions on Iran last month in hopes of keeping oil flowing on global markets, the Trump administration reversed course in recent weeks and unveiled a blitz of new sanctions intended to intensify pressure on Iran.
“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,” Treasury Secretary Scott Bessent said in a statement. “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: “Any institution that facilitates or engages with these networks is at risk of severe consequences.”
Iran uses its shadow banking system to evade Western sanctions. It is a network of private businesses that operate international shell companies that accept payments for illicit oil sales. The network also facilitates transactions for weapons components that Iran uses to supply its arsenal.
The sanctions announced on Tuesday target 35 entities and individuals that oversee the system.
Separately on Tuesday, the Treasury Department 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 scrutinize transactions involving the independent refineries, which account for the majority of China’s purchases of Iranian oil.
“Financial institutions should take steps to ensure they are not facilitating transactions involving designated teapot refineries, or other teapot refineries that may be importing Iranian oil, because this may 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.
Alan Rappeport is an economic policy reporter for The Times, based in Washington. He covers the Treasury Department and writes about taxes, trade and fiscal matters.
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