A network of Chinese "teapot" refineries is processing the majority of Iran's oil exports to help Tehran evade international sanctions [1].

This covert operation allows Iran to funnel billions of dollars into its economy while providing China with access to cheap crude oil [1, 2]. The U.S. Treasury Office of Terrorism and Financial Intelligence said these activities are a primary mechanism for sanctions evasion [2].

The refineries are concentrated in the Cangzhou region of China [1]. These smaller, independent facilities, known as teapot refineries, handle the bulk of the imports that allow Iran to maintain its financial stability despite global pressure [1, 2].

Data indicates that China purchases approximately 90% of Iran's oil exports [2]. The U.S. Treasury said these refineries risk facing sanctions for their role in the shadow trade [2].

While the U.S. continues to monitor these energy flows, other sectors of the Chinese economy are showing growth. Industrial profits in China rose 15.8% year-over-year in March 2026 [3].

The continued processing of Iranian crude represents a direct challenge to U.S. foreign policy in the Middle East. By acting as a financial lifeline, the Cangzhou refineries ensure that Tehran can continue its domestic and international operations despite the lack of formal trade agreements with Western nations [1, 2].

“China purchases approximately 90% of Iran's oil exports”

The reliance of Iranian oil exports on Chinese teapot refineries creates a strategic dependency that undermines U.S. sanctions. Because these refineries operate outside the primary state-owned oil giants, they provide a flexible and opaque layer of insulation that makes enforcement difficult for international regulators.