CNN Analysis: China's Small "Teapot" Refineries Import Sanctioned Iranian Oil Through a System Separate From the US Dollar

CNN, in an analytical report that Iran's ISNA news agency carried on Thursday, 5 Shahrivar 1405 (August 27, 2026), wrote that China is importing sanctioned Iranian crude oil through an opaque system designed to stay separate from the US dollar system and sanctions. According to the report, small Chinese refineries known as "teapots," mainly in Shandong province, buy and process this oil, relying on a network of ports, financial institutions and tankers that have largely stayed hidden from international detection; the US Treasury (OFAC) had separately warned on 8 Ordibehesht 1405 (April 28, 2026) that these teapot refineries process roughly 90 percent of Iran's oil exports through the US financial system.

Max Meizlish, a senior analyst at the Washington based Foundation for Defense of Democracies, told CNN that many of these entities are directly or indirectly owned by large Chinese state firms integrated into the US dollar system, and that Washington could pressure parent companies by sanctioning their subsidiaries. Zhao Long, director of the Shanghai Institute for International Strategic Studies, said Beijing is unlikely to accept a US demand to determine which third country trade is legal. Sun Chenghao, a researcher at Tsinghua University, warned that sanctioning major Chinese banks could push a possible Xi Jinping and Trump meeting from stabilizing relations toward damage control.