US sanctions Chinese refiner, freezes Iranian cryptocurrency... intensifies pressure ahead of second negotiation

Chinese Hengli Group Refinery

The US Treasury Department and State Department announced on the 24th (local time) that they would sanction Hengli Group, a major Chinese refiner that imports oil from Iran.

The Office of Foreign Assets Control (OFAC) under the Treasury Department pointed out that Hengli Group is one of the 'largest customers' purchasing billions of dollars worth of Iranian oil.

The Treasury Department's assessment is that Chinese refiners, including Hengli Group, are providing economic support to Iran, including the Iranian military, by importing such sanctioned oil.

Hengli has the capacity to process approximately 400,000 barrels of crude oil per day through its refining facilities in Dalian, a port city in northeastern China, making it the largest among individual refiners in China, known as 'teapots'.

The Treasury Department also announced sanctions on approximately 40 shipping companies and vessels operating a 'shadow fleet' to transport Iranian oil while evading sanctions.

Companies and vessels subject to sanctions will have their assets in the US frozen, and their financial interests blocked. Sanctions will also be imposed on entities in which they directly or indirectly own 50% or more equity, and on institutions that conduct transactions of funds, goods, or services with them.

Along with this, the Treasury Department froze cryptocurrencies worth approximately $344 million (about 500 billion won) believed to be linked to Iran.

Treasury Secretary Scott Besant stated on his X account that OFAC is imposing sanctions on 'several wallets' linked to Iran, adding that this will "systematically weaken Tehran's ability to generate, move, and repatriate funds."

Secretary Besant said, "We will track funds that Tehran is desperately trying to move abroad and target all financial lifelines connected to the regime."

CNN reported that this cryptocurrency freeze was carried out through Tether, the issuer of the world's largest stablecoin USDT, based on information provided by the Treasury Department.

Previously, the Treasury Department had launched an 'Economic Fury' operation to exert economic pressure on Iran, including hinting at the possibility of 'secondary boycotts' (secondary sanctions) against two Chinese banks where Iranian funds were detected.

Secretary Besant said, "Through the 'Economic Fury' operation, we will exert financial pressure on the Iranian regime, thereby weakening its aggression in the Middle East and helping to curb its nuclear ambitions."

Secretary Besant added, "At the direction of President Donald Trump, we will continue to tighten the network of vessels, intermediaries, and purchasers that Iran relies on to move its oil to global markets."

Since February last year, the Treasury Department, through OFAC, has sanctioned over 1,000 Iran-related individuals, vessels, and aircraft.

The Treasury Department's sanction announcement is seen as a measure to pressure both sides to accept the US demands as much as possible in the second peace talks, following the maritime blockade against Iran and targeting China, Iran's largest oil export destination. The timing of this sanction announcement, ahead of US President Trump's visit to China in mid-next month, also suggests an aspect of securing leverage against China.

Secretary Besant explained, "China has purchased over 90% of Iranian crude oil," adding, "This accounts for approximately 8% of China's energy demand."