US sanctions China-linked Iran oil network ahead of Trump-Xi summit

The administration of Donald Trump on Monday announced sweeping new sanctions targeting a China-linked network accused of helping Iran secretly ship oil to Chinese buyers, intensifying pressure on Tehran just days before Trump’s high-stakes meeting with Chinese President Xi Jinping in Beijing.

The US Treasury Department sanctioned three individuals and nine companies — including four based in Hong Kong, four in the United Arab Emirates and one in Oman — alleging that they helped Iran’s Islamic Revolutionary Guard Corps (IRGC) move crude oil to China through a maze of shell companies, covert payments and sanctions-evasion mechanisms.

The companies targeted include:

The latest measures come at a sensitive geopolitical moment, with the Trump administration attempting to tighten its “Maximum Pressure” campaign against Tehran even as Washington acknowledges that China has emerged as the primary lifeline for Iranian oil exports.

Trump is expected to press Xi during their upcoming summit to curb Chinese purchases of Iranian crude and help reopen shipping lanes through the Strait of Hormuz, which remains under severe strain amid the continuing Iran conflict.

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The sanctions announcement followed Trump’s blunt remarks earlier on Monday that the ceasefire with Iran was “on life support” after Tehran rejected a US-backed peace proposal.

“I would call it the weakest right now, after reading that piece of garbage they sent us,” Trump said. “I didn’t even finish reading it.”

His comments renewed fears that the 10-week conflict could drag on further and continue disrupting global energy markets through the Strait of Hormuz, one of the world’s most strategically important oil chokepoints.

Iran’s response to Washington reportedly demanded compensation for war-related damage, an end to sanctions, removal of the US naval blockade and recognition of Tehran’s sovereignty over the Strait of Hormuz. Tehran also called for an end to the wider regional conflict, including fighting involving the Iran-backed Hezbollah group in Lebanon.

Against that backdrop, the fresh sanctions signal Washington’s growing frustration over what US officials describe as an increasingly sophisticated China-Iran sanctions-busting architecture.

According to the Treasury Department’s Office of Foreign Assets Control (OFAC), the sanctioned individuals worked for the IRGC’s Shahid Purja’fari oil headquarters and coordinated oil payments through Turkey-based Golden Globe, a company already sanctioned by the United States in July 2025 for allegedly facilitating hundreds of millions of dollars in annual Iranian oil sales.

Treasury Secretary Scott Bessent said the administration would continue targeting the financial ecosystem that allows Iran to fund its military, nuclear programme and regional proxy groups.

“Treasury will continue to cut the Iranian regime off from the financial networks it uses to carry out terrorist acts and to destabilize the global economy,” Bessent said.

The US State Department separately announced a reward of up to $15 million for information leading to the disruption of IRGC financial networks.

The latest sanctions also reinforce a broader concern increasingly taking shape in Washington: that China has quietly built an alternative trade system allowing Iran to bypass Western banking restrictions and continue exporting crude at near-record levels.

China is believed to be purchasing nearly 80 to 90 per cent of Iran’s oil exports through off-the-books trade channels involving Hong Kong-based intermediaries, smaller Chinese refiners and barter-style arrangements that avoid dollar-based transactions.

Data from the first quarter of 2026 showed Iranian exports surging to nearly 2.2 million barrels per day despite continued US sanctions, highlighting the limits of Washington’s pressure campaign.

At the centre of this workaround is a shadow financial system that reportedly replaces direct cash payments with infrastructure and technology deals. Rather than routing transactions through the international banking network, Chinese buyers reportedly place payments into tightly controlled domestic yuan accounts, which are then used to fund Chinese-led infrastructure projects inside Iran.

This parallel system includes “closed-loop” currency arrangements, barter-style exchanges and regional banks operating outside Western financial oversight, Geeta Kochhar, Senior Assistant Professor of Chinese Studies at Delhi’s Jawaharlal Nehru University had told Firstpost earlier.

Smaller independent “teapot” refineries in China’s Shandong province have emerged as major buyers of Iranian crude, often relying on regional lenders such as Bank of Kunlun rather than large state-owned Chinese banks exposed to Western sanctions.

Analysts also point to a growing “shadow fleet” network involving more than 3,000 vessels conducting covert ship-to-ship transfers, with Iranian crude often relabelled as Malaysian or Omani oil before entering Asian markets.

Washington has additionally raised concerns about a broader oil-for-technology pipeline between Beijing and Tehran. Experts say Iran has increasingly exchanged crude supplies for Chinese machinery, semiconductors, drones and air defence systems as it attempts to rebuild military capabilities during the current conflict.

“The Chinese have been sharing missile and drone technology with the Iranians over the years; this is well-documented,” Anand Parappadi Krishnan of Shiv Nadar University and the Institute of Chinese Studies had told Firstpost earlier.

Geeta noted that Iran’s trade with China increasingly functions through barter systems and non-dollar mechanisms specifically designed to evade U.S. sanctions.

The Trump administration now appears determined to raise the issue directly with Xi during the Beijing summit, especially as China rolls out legal protections for its refiners against American sanctions.

Earlier this month, Beijing introduced its first formal “Blocking Order” aimed at shielding Chinese companies from compliance with foreign sanctions, a move analysts say effectively institutionalises the parallel trade framework sustaining Iran’s oil exports.

With inputs from Agencies.