Tammy Bruce, spokeswoman for the State Department, noted that China is “by far” the largest importer of Iranian crude.

“These sanctions are being imposed pursuant to President Trump’s maximum pressure campaign to drive Iran’s oil exports, including to China, to zero,” Bruce stated. “The Iranian regime uses the revenue it generates from these sales to finance attacks on U.S. allies, support terrorism around the world and pursue other destabilizing actions.”

“Teapot” refineries are small, independent, privately-owned oil refineries that have the effect of insulating larger, state-owned Chinese oil companies from the threat of U.S. sanctions. In 2017, experts estimated that China had more than 150 such refineries.

Thursday’s sanctions target Shandong Shouguang Luqing Petrochemical Co., which the Treasury department accuses of buying millions of barrels of Iranian petroleum worth half-a-billion dollars.

China does not recognize U.S. oil sanctions on Iran, but the Treasury Department described how Chinese companies like Luqing Petrochemical nonetheless try to conceal the origin of the petroleum they purchase.

“Luqing Petrochemical received Iranian oil transported by shadow fleet vessels, some of which have been sanctioned for their role transporting Iranian petroleum linked to the Houthis and Iranian Ministry of Defense of Armed Forces Logistics, including the Mehle and the Kohana,” the department stated. “In mid-2022, Luqing Petrochemical was identified as a buyer of Iranian oil associated with the Iranian military and Iranian military forces.”

In addition to Luqing, the Treasury Department imposed sanctions on eight oil tankers as well as on 11 corporate entities based in China, Hong Kong, the British Virgin Islands, Panama and Seychelles.