The US government ratcheted up pressure on Tehran on Tuesday, imposing sanctions on 35 entities and individuals for their roles in Iran`s shadow banking sector, and threatened sanctions against banks doing business with Chinese "teapot" refineries that it said are paying tolls for shipments to cross the Strait of Hormuz.

The Treasury Department`s Office of Foreign Assets Control said the designated individuals and firms had facilitated the movement of the equivalent of tens of billions of dollars tied to sanctions evasion and what it called Iran`s sponsorship of terrorism.

OFAC separately warned banks against doing business with any firm paying the Iranian government or the Islamic Revolutionary Guard Corps for passage through the strait, saying they faced the risk of significant sanctions.

It singled out independent Chinese teapot refineries, primarily in Shandong province, given their role in importing and refining Iranian oil, noting that some had used the US financial system to conduct dollar-denominated transactions and procure US goods.

China has said it opposes "illegal" unilateral ⁠sanctions.

Efforts to end the two-month Iran war remained at an impasse on Tuesday, with US President Donald Trump unhappy at the latest plan from Tehran that proposed setting aside discussion of its nuclear program until the conflict was concluded and shipping disputes were resolved.

Treasury said Tuesday`s sanctions targeted individuals and firms that allowed Iran’s armed forces, including the IRGC, to access the international financial system to receive payment for illicit oil sales, purchase sensitive components for missiles and other weapons systems, and transfer money to Iran’s proxies.

“Iran’s shadow banking system serves as a critical financial lifeline for its armed forces, enabling activities that disrupt global trade and fuel violence across the Middle East,” Treasury Secretary Scott Bessent said in a statement.

"Illicit funds funneled through this network support the regime’s ongoing terrorist operations, posing a direct threat to US personnel, regional allies, and the global economy," he said, adding any institution that facilitated or engaged with these networks was at risk of "severe consequences.”

MORE THAN 1,000 SANCTIONS ACTIONS TAKEN

The designations were intended to expose and disrupt the mechanisms used by Tehran to receive payment for oil and other commodities and reduce its revenue, Treasury said.

Since February 2025, OFAC has imposed sanctions on about 1,000 Iran-related individuals, vessels and aircraft as part of a campaign to exert maximum economic pressure against Iran`s shadow banking, money laundering and sanctions evasion networks.

Iranian banks cut off from Western financial systems rely on private companies known as rahbars, which manage thousands of shell companies overseas to execute payments for Iranian imports and exports. Those companies then coordinate with other firms to facilitate payments for firms facing sanctions.

The companies hit with sanctions include Farab Soroush Afagh Qeshm Company, which OFAC said works with Iran`s Shahr Bank to enable Iranian oil sales, and two of its senior executives.

OFAC also designated several rahbar companies that it said work with Bank Sina, which is controlled by Iran`s supreme leader, and the military-affiliated Bank Sepah, which has funded Iran`s ballistic missile program, Treasury said.

OFAC designated two companies, Nix Energy and Tai Lung Trading, that Treasury said had been used to transfer millions of dollars on behalf of Iranian individuals that had been sanctioned in the past.

In a separate alert, Treasury underscored that no payments to Iran or the IRGC for safe passage through the strait would be authorized for US persons or institutions, and that foreign financial institutions "risk exposure to sanctions" for engaging in transactions with anyone paying such "tolls."

The Trump administration has already imposed sanctions on five Chinese teapot refineries, including Friday`s action against Hengli Petrochemical (Dalian) Refinery, one of Iran`s largest customers of crude oil and petroleum products.

The US sanctions, ⁠which block US assets of those designated and prevent Americans from doing business with them, have deterred some larger independent refiners from buying Iranian oil. China buys more than 80% of Iran`s shipped oil, 2025 data from analytics firm Kpler showed.

Brett Erickson, managing principal at Obsidian Risk Advisors, said the Trump administration should go after Chinese banks that were aiding Tehran more broadly.

“Washington keeps talking about waging a maximum pressure campaign, but it is still avoiding the one move that would actually matter," he said. "If you are not willing to target the Chinese banks propping up the regime in Tehran, you are not going for the jugular, you are running a charade.”