Chinese refiners begin cutting output as Iran war restricts oil supply
Zhejiang Petrochemical Corp, a major Chinese refinery backed by Saudi Aramco, is shutting down a 200,000-barrel-per-day processing unit, bringing forward maintenance in response to the impact of the Middle East conflict on crude supply, it said on Tuesday. Separately, another Aramco-backed Chinese refinery, Fujian Refining and Petrochemical Co, or FREP, shut its smaller 80,000-bpd crude unit for an unspecified period, two industry sources familiar with the matter said.
TL;DR
- Zhejiang Petrochemical Corp (ZPC) is bringing forward maintenance on a 200,000-barrel-per-day crude unit.
- Fujian Refining and Petrochemical Co (FREP) has shut its 80,000-bpd crude unit for an unspecified period.
- These closures are a direct response to supply disruptions caused by the Middle East conflict impacting the Strait of Hormuz.
- China, heavily reliant on Middle Eastern crude (about 50%), faces potential production cuts at other refineries.
- ZPC's accelerated maintenance will last one month and reduce its production by 20%.
- FREP, a joint venture including Sinopec, ExxonMobil, and Aramco, shipped nearly 95% of its crude via the Strait of Hormuz last year.
- Analysts predict other Chinese refineries may implement preventive production cuts due to shipping paralysis from the Middle East.