Chinese Oil Storage Site Sanctioned by U.S. for Ties to Iran Crude Pipeline

(Reuters) — The Trump administration imposed sanctions on Iranian oil trading networks on Thursday, including on a China-based crude oil storage terminal linked via a pipeline to an independent refinery, just days before talks between the U.S. and Iran.

The sanctions came after Secretary of State Marco Rubio said the U.S. will hold direct talks with Iran on Saturday in Oman. President Donald Trump said on Monday that Iran would be in "great danger" if the talks were unsuccessful.

The U.S. imposed sanctions on Guangsha Zhoushan Energy Group Co Ltd, which operates a crude oil and petroleum products terminal on Huangzeshan Island in Zhoushan that knowingly engaged with oil from Iran and is connected through the Huangzeshan–Yushan Under Sea Oil Pipeline to an independent refinery, the U.S. State Department said.

"This terminal is directly connected to a major refinery complex in China, demonstrating the role that China-based refiners continue to play in the purchase, acquisition, and processing of Iranian crude oil," the State Department said, without naming the refinery.

However, tanker tracking firms Vortexaand Kpler and trade sources told Reuters that the refinery has refrained from buying Iranian oil.

The State Department said the terminal had acquired Iranian crude at least nine times between 2021 and 2025, including from U.S. sanctioned vessels, and has imported at least 13 million barrels of Iranian crude oil.

The terminal, in the eastern province of Zhejiang, is not a major player in Iranian oil, which lands mostly in independent refining hub Shandong province to the north. China buys roughly 90% of Iran's exported oil, with imports averaging about 40 million barrels per month, according to traders and analysts.

Calls and an email to Guangsha Zhoushan Energy went unanswered.

China's Iranian oil imports surged in March as buyers and dealers stocked up, anticipating more U.S. measures would tighten supplies further.

"The United States remains focused on disrupting all elements of Iran’s oil exports, particularly those who seek to profit from this trade," U.S. Treasury Secretary Scott Bessent said.

China and Iran have built a trading system that uses mostly Chinese yuan and a network of middlemen, avoiding the dollar and exposure to U.S. regulators.

The Chinese embassy in Washington did not immediately respond to a request for comment. But in response to a sanction on a teapot refinery last month, a spokesperson said: "China has always been firmly opposed to illegal and unjustifiable unilateral sanctions and so-called long-arm jurisdiction by the U.S."

It was Washington's latest round of sanctions on Iran since Trump said in February he was re-imposing a "maximum pressure" campaign including efforts to drive down the country's oil exports to zero in order to prevent it from getting a nuclear weapon.

Iran says its nuclear program is for civilian purposes.

'Defies Logic'

Typically Washington puts a pause on fresh sanctions ahead of delicate negotiations with adversaries such as Iran, a lawyer and sanctions expert said. "It defies logic," said Jeremy Paner, a partner at the law firm Hughes Hubbard & Reed and a former Treasury Department sanctions investigator.

The Treasury Department also designated United Arab Emirates (UAE)-based Indian national Jugwinder Singh Brar, who owns shipping companies with a fleet of nearly 30 vessels.

"Brar’s vessels engage in high-risk ship-to-ship (STS) transfers of Iranian petroleum in waters off Iraq, Iran, the UAE, and the Gulf of Oman," the department said in a statement.

The sanctions also target two UAE- and two India-based entities that own and operate Brar’s vessels that have transported Iranian oil on behalf of the National Iranian Oil Company and the Iranian military, Treasury said in a statement.

"The Iranian regime relies on its network of unscrupulous shippers and brokers like Brar and his companies to enable its oil sales and finance its destabilizing activities," Bessent said.

The sanctions block U.S. assets of those designated and prevent Americans from doing business with them.

Paner said the Chinese targets would likely be impacted by the sanctions, but Thursday's sanctions overall will not choke Iran's oil trade.

"If you're going to show them that you are really serious, you would target (Chinese) banks or P&I clubs," or protection and indemnity insurance groups that provide services to oil tankers, Paner said.

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