The US State Department said the sanctions against Shandong Shengxing Chemical Co., Ltd, which purchased over a billion dollars' worth of Iranian oil, were part of the US president's campaign to "drive Iran's illicit oil exports" to zero.

So-called "teapot" refineries are small, privately owned operations in China and stand in contrast to the larger state-owned enterprises in the country.

The United States also sanctioned "several" companies and vessels involved in facilitating Iranian oil shipments to China as part of Iran's so-called "shadow" fleet, State Department spokesperson Tammy Bruce said in a statement.

"As Long (sic) as Iran attempts to generate oil revenues to fund its destabilizing activities, the United States will hold both Iran and all its partners in sanctions evasion accountable," she said.

Since returning to office in January, Donald Trump has reinstated a campaign of "maximum pressure" against Iran, rolling out sanctions against several individuals and entities, including the country's oil minister.

Last month, the United States unveiled sanctions against a "teapot" refinery in China's Shandong province that bought Iranian oil worth around $500 million from ships linked to Yemen's Huthi rebels.

The move drew strong condemnation from Beijing, which accused the Trump administration of "undermining the normal trade and economic cooperation between China and Iran."

Earlier Wednesday, the United Nations nuclear watchdog chief Rafael Grossi warned that Iran was "not far" from possessing a nuclear bomb, shortly before he arrived in Tehran for talks.

The International Atomic Energy Agency (IAEA) was tasked with overseeing Iran's nuclear program and its compliance with a 2015 nuclear deal, which collapsed three years later when the United States withdrew from it during Trump's first term.