On March 20, 2025, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) designated the “teapot” Chinese oil refinery Shandong Shouguang Luqing Petrochemical Co., Ltd. (“Luqing Petrochemical”), its chief executive officer, eight vessels, and eleven vessel owners, managers, and operators, on OFAC’s List of Specially Designated Nationals and Blocked Persons (“SDN List”). OFAC explains that Luqing Petrochemical purchased hundreds of millions of dollars’ worth of crude oil from Iran, at times using vessels linked to designated terrorist organization Ansarallah—also known as the Houthis—and the Iranian Ministry of Defense of Armed Forces Logistics.
On the same day, the Department of State designated Huaying Huizhou Daya Bay Petrochemical Terminal Storage Co., Ltd. (“Huaying Petrochemical”). The Department’s press released explains that Huaying Petrochemical is a crude oil and petroleum products storage terminal in the port of Huizhou in China that received and stored Iranian-origin crude oil onboard a blocked tanker. Both departments cited President Trump’s reinstatement of “maximum pressure” on Iran as the impetus for these actions.
This represents an escalation of OFAC’s Iran-related designations since President Trump took office. Over the last two months, OFAC has issued several rounds of designations, often targeting vessels and related parties for trading in Iranian crude. Today’s actions specifically target downstream entities in China, which buys the majority of Iran’s oil exports, and OFAC highlights that it is the first time, that the U.S. government has designated a Chinese oil refinery for refining Iranian oil.
We will continue to closely monitor the Trump Administration’s expansion of its maximum pressure campaign, particularly to the extent that it expands beyond those directly transacting with Iranian parties to capture further downstream users or refiners of Iranian products. Companies should continue to engage in their know-your-customer (“KYC”) processes to confirm that they are not having indirect dealings with Iran, as well as to confirm whether any counterparties in China, the United Arab Emirates, or other known diversion points have historic dealings with Iran, which could subject the counterparties to sanctions designations.