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China Directs Refiners to Maintain High Fuel Output Amid Iran Conflict Fears
China has instructed some of its largest oil refiners to maintain high fuel production levels in a bid to secure domestic energy supplies amid escalating geopolitical tensions between the United States and Iran, according to a report from Bloomberg News.
Securing Domestic Supply
Citing people familiar with the matter, the report stated that at least two major refineries have been asked to sustain or even increase their processing rates. This directive comes despite elevated domestic inventories of gasoline and diesel and a structural slowdown in local fuel demand, underscoring Beijing's focus on energy security.
The move reflects growing concern over potential disruptions to crude oil shipments through the Strait of Hormuz, a critical transit chokepoint for about one-fifth of global oil consumption. Renewed hostilities in the region, along with a recent U.S. decision to revoke a waiver for Iranian crude sales, have intensified these supply fears.
AdImpact on Asian Markets
For the broader market, China's push for higher refinery utilization is expected to exert further pressure on already weak Asian refining margins. According to the report, the spread between regional gasoline prices and Dubai crude has already fallen to its lowest level since late March.
Initially, China had curbed fuel exports when the conflict began but later issued additional export quotas. Bloomberg reported that Beijing will not revise the existing export quotas for July, signaling that the primary focus remains on ensuring domestic fuel availability rather than altering its export policy.