China Directs Refiners to Maintain High Fuel Output Amid Mideast Tensions

China has instructed some of its largest oil refiners to maintain high fuel production to ensure domestic energy security amid escalating military tensions between the U.S. and Iran, according to a Bloomberg News report published Saturday. The directive highlights Beijing's concerns over potential disruptions to crude oil shipments passing through the critical Persian Gulf waterway.

Directive Amid Market Headwinds

Citing people familiar with the matter, the report stated that at least two major refineries were told to maintain or increase their processing rates. This order comes despite a backdrop of elevated domestic gasoline and diesel inventories and a structural slowdown in China's fuel demand.

The move signals a strategic priority to secure domestic supply over near-term market fundamentals. Authorities are reportedly not planning to revise July fuel export quotas, reinforcing the focus on keeping refined products within the country as geopolitical risks rise.

Implications for Asian Markets

The directive is poised to have a significant impact on regional energy markets. Increased refinery runs in China, the world's largest crude importer, are expected to add further pressure to already weak Asian refining margins.

Ad

This pressure is already visible in key market indicators. According to the report, the spread between regional gasoline prices and Dubai crude—a benchmark for Asian refining profitability—has already fallen to its lowest point since late March.

Heightened Focus on Energy Security

Beijing has closely monitored its energy security since fighting intensified around the Strait of Hormuz, a vital chokepoint through which approximately one-fifth of global oil consumption passes. The latest directive underscores a preparation for a potentially prolonged period of geopolitical instability.

China had initially restricted exports of gasoline, diesel, and jet fuel when the conflict began, before later easing those curbs and issuing additional export quotas. The renewed hostilities and Washington's decision to revoke a waiver for Iranian crude sales have revived concerns over both crude import stability and domestic fuel availability.