China Instructs Refiners to Maintain Fuel Supply Amidst Geopolitical Tensions

China's state planner has instructed independent refiners to maintain their operational levels as they have averaged over the past two years. This directive, reported through sources on Thursday, is aimed at safeguarding the domestic fuel supply amid the risk of reduced output.

This move is seen as a strategic response to anticipated cuts in crude processing rates in the wake of soaring oil prices, driven by geopolitical tensions involving a U.S.-Israeli conflict with Iran. Smaller refiners had been considering cuts amid ongoing weak domestic demand. The National Development and Reform Commission (NDRC) conveyed this message during a meeting with independent refiners, although they have yet to comment publicly.

Refiners face potential penalties in the form of reduced crude import quotas if they fail to comply. China manages its oil imports by these independents, often referred to as 'teapots', under a strict quota system. In efforts to prevent a fuel shortage due to Middle Eastern conflicts, Chinese authorities have already extended a suspension on refined fuel exports for another month.