OFAC Imposes Further Iranian Sanctions as Part of Maximum Pressure Campaign

On March 20, 2025, the US Department of Treasury’s Office of Foreign Assets Control (“OFAC”) designated a “teapot” oil refinery and its CEO for purchasing and refining Iranian crude oil, including from vessels linked to Ansarallah, commonly known as the Houthis and recently re-designated as a Foreign Terrorist Organization, and the Iranian Ministry of Defense of Armed Forces Logistics (“MODAFL”).  This action follows earlier sanctions, which we covered here and here, pursuant to Executive Orders (“EO”) 13846 and 13902 and President Trump’s National Security Presidential Memorandum 2, seeking to exercise “maximum pressure” to “drive Iran’s export of oil to zero.”

Treasury Secretary Scott Bessent provided the following remarks on the action:  “Teapot refinery purchases of Iranian oil provide the primary economic lifeline for the Iranian regime, the world’s leading state sponsor of terror... The United States is committed to cutting off the revenue streams that enable Tehran’s continued financing of terrorism and development of its nuclear program.”  Additionally, the US State Department released a fact sheet about OFAC’s designation.

Sanctioned Entities and Vessels

Below is an overview of the key entities, vessels, and individuals that were targeted by this action.  For a detailed list of the designations, please see OFAC’s website.

Teapot Refinery

The term “teapot” refinery refers to smaller, independent oil refineries in China (which is the largest importer of Iranian oil).  These refineries form part of an Iran-China trading system that uses mostly Chinese yuan and a network of middlemen, attempting to avoid exposure to US regulators. 

It is the first time that OFAC has targeted a small refinery and appears to be part of its efforts to increase pressure on Iran through China.  As Tammy Bruce, Spokesperson for the Department of State explained:  “These sanctions are being imposed pursuant to President Trump’s maximum pressure campaign to drive Iran’s oil exports, including to China, to zero.  China is by far the largest importer of Iranian oil. 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.”

The targeted refinery apparently purchased millions of barrels of Iranian oil worth approximately half a billion dollars.  Some of the vessels by which the refinery received these shipments, making up the “shadow fleet” were sanctioned on January 12, 2024, pursuant to EO 13224, in connection with their transportation of Iranian crude oil on behalf of the Houthis and MODAFL.  OFAC also sanctioned the CEO and legal representative of the refinery under EO 13902.

Shadow Fleet

OFAC also targeted eight vessels that it considers to be part of the “shadow fleet.”  The term (also referred to as the “ghost,” “dark,” or “parallel” fleet) generally refers to older vessels that are anonymously owned and/or have opaque corporate structures that are solely deployed in the trade of sanctioned oil or oil products and engage in various deceptive shipping practices, including automatic identification system manipulation.  OFAC designated a total of eleven companies pursuant to EO 13902 for operating in the petroleum sector of the Iranian economy.

Implications of the Sactions

As a result of OFAC’s designations, all property, and interests in property of the persons above that are in the United States or in the possession or control of US persons are blocked and must be reported to OFAC. In addition, any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked.

All transactions by US persons or within (or transiting) the United States that involve any property or interests in property of designated or blocked persons are prohibited unless authorized by a general or specific license issued by OFAC or exempt. These prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person and the receipt of any contribution or provision of funds, goods, or services from any such person.

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