By Ginika Igboke
As the United States intensifies economic pressure on Iran to halt its pursuit of nuclear weapons, Washington has increasingly turned its focus toward Beijing, which remains one of Tehran’s most important economic backers through the purchase of Iranian oil. Analysts say the strategy is also designed to strengthen President Donald Trump’s leverage ahead of his scheduled summit with Chinese leader Xi Jinping in mid-May.
On April 15, the United States launched “Operation Economic Fury,” a sweeping campaign aimed at cutting off Iran’s revenue sources and weakening the regime’s ability to fund its military operations.
The same day, Iranian President Masoud Pezeshkian claimed that Washington intended to “take [Iran] down first, and then deal with China” while receiving Chinese humanitarian supplies in Tehran. A U.S. naval blockade of Iran had begun two days earlier.
William Lee, chief economist at Global Economic Advisors, said Iran’s remarks may partly reflect an effort to encourage greater Chinese support, but argued there is also “an element of truth” behind the statement.
“The ultimate target here is China,” Lee said, noting that Washington appears intent on depriving Beijing of access to heavily discounted Iranian oil.
As part of the maximum-pressure campaign, the U.S. Treasury warned two Chinese banks about possible secondary sanctions for helping facilitate Iranian business activity. Washington also sanctioned Hengli Petrochemical, one of China’s largest independent oil refineries, over its alleged role in processing Iranian crude.
Around the same period, the U.S. military intercepted a stateless tanker in the Indian Ocean carrying millions of barrels of Iranian oil believed to be headed toward Southeast Asia and ultimately China.
Chinese ‘Teapot’ Refineries Under Pressure
For years, China has remained the largest buyer of Iranian oil despite U.S. sanctions. Revenue from those sales has helped sustain Iran’s economy and military operations, while giving China access to cheaper energy supplies and opportunities to conduct trade in Chinese yuan instead of U.S. dollars.
Unlike China’s major state-owned energy companies, which generally avoid Iranian crude because of sanctions risks, smaller independent refineries—often called “teapots”—have relied heavily on Iran for oil imports.
On April 24, the Treasury Department sanctioned Hengli Petrochemical, describing it as one of Iran’s largest customers and accusing it of participating in billions of dollars’ worth of Iranian oil transactions.
The sanctions also targeted parts of Iran’s so-called shadow fleet, a network of aging tankers used to obscure the origin and destination of sanctioned oil shipments. Analysts say many ship-to-ship transfers involving Iranian crude occur near Malaysia and east of the Singapore Strait before cargo is transported to China.
According to commodities data firm Kpler, Hengli’s refinery capacity is roughly 400,000 barrels per day—equivalent to about one-third of China’s daily imports from Iran. Other estimates place China’s Iranian oil imports between 1.2 million and 1.7 million barrels per day in recent years.
Analysts note that Hengli is far more deeply connected to China’s banking and political system than many previously sanctioned firms. State media reports have previously identified the company as partly linked to Sinochem Holdings, a major Chinese state-controlled conglomerate.
Hengli denied engaging in trade with Iran in an April filing to the Shanghai Stock Exchange, stating that it would continue purchasing crude oil through yuan-settled channels.
China’s Ministry of Commerce later issued an order intended to block U.S. sanctions targeting Hengli and other Chinese refiners accused of handling Iranian oil.
U.S. Secretary of State Marco Rubio responded by warning that any company ignoring American sanctions could face secondary penalties.
Shadow Fleet Interceptions Raise Stakes
China stopped publicly reporting Iranian oil imports in 2022, and much of the trade has since been disguised as Malaysian imports. Analysts estimate that more than 160 million barrels of Iranian crude are currently at sea.
The United States has increasingly sought to disrupt those shipments directly.
On April 20 and 21, U.S. forces intercepted the tanker M/T Tifani in the Indian Ocean near the Maldives. Authorities said the vessel was carrying roughly 2 million barrels of Iranian crude worth an estimated $200 million.
Days later, another sanctioned tanker, Majestic X, was intercepted in waters between Sri Lanka and Indonesia while reportedly heading toward Zhoushan, China.
Experts say the interceptions create uncertainty for shadow-fleet operators, though some believe the deterrent effect may be temporary.
Concerns Over Chinese Military Support
Washington is also investigating whether China has provided Iran with military-related materials.
On April 12, Trump warned that the United States could impose a 50 percent tariff on Chinese goods if evidence confirms Beijing supplied military support to Tehran.
Days later, U.S. Central Command intercepted the Iranian-flagged cargo ship M/V Touska. Trump later referenced the seizure during an interview, saying U.S. forces had intercepted a vessel carrying a “gift from China.”
Former U.N. ambassador Nikki Haley said the cargo included missile-related chemical precursors.
Analysts believe China is unlikely to openly provide advanced weaponry to Iran because Beijing seeks to preserve relationships with other Middle Eastern partners such as Saudi Arabia and the United Arab Emirates.
Still, Washington has continued increasing pressure. On May 8, the State Department imposed sanctions on three Chinese companies accused of supplying satellite imagery that allegedly assisted Iranian military attacks against U.S. forces.
Trump–Xi Summit Looms Over Sanctions Strategy
Observers say the timing of the latest sanctions is closely tied to the upcoming Trump–Xi summit in Beijing.
Max Meizlish of the Foundation for Defense of Democracies noted that the sanctions on Hengli include an unusual one-month grace period, effectively delaying full enforcement until after the summit concludes.
While the sanctions against Chinese refineries are significant, Meizlish argued that the real leverage lies within China’s banking system, which facilitates the transactions.
Some analysts believe Washington is deliberately avoiding its strongest financial measures for now.
Yeh Yao-yuan, a professor at the University of St. Thomas in Houston, said Trump may prefer to stabilize the Iran conflict before escalating pressure on China further.
He argued that a future U.S.–Iran agreement could still significantly weaken China by reducing access to discounted Iranian oil, increasing Beijing’s energy costs, and affecting sectors such as artificial intelligence and manufacturing.
According to estimates cited in the report, China may save roughly $5 billion annually through discounted Iranian oil purchases.
Analysts also say Beijing’s independent refiners are increasingly vulnerable as sanctions and rising oil prices place financial pressure on smaller operators.
Others believe the expanding sanctions campaign is intended to send a direct message to Xi Jinping ahead of the summit.
“The United States sanctions Hengli as a way of confronting Xi Jinping about the role the Chinese regime plays in the Iran issue,” China analyst June G. Liao said.
She added that Washington is effectively asking Beijing whether it is willing to continue supporting Iran—and what price it is prepared to pay for doing so.
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