GreenergyDaily

Jun. 2, 2026

China Eases Output Requirements for Loss-Making Independent Refiners

China has allowed some independent refiners to cut output from June, relaxing earlier requirements aimed at safeguarding fuel supplies during disruptions caused by the closure of the Strait of Hormuz.

Some refiners in the eastern province of Shandong, popularly called teapots, were told recently that they can cut output to no lower than 80% of last year's monthly average, consultancy Horizon Insights said in a note on Monday.

Two trade sources briefed by the refiners confirmed the notice from the National Development ⁠and Reform Commission.

The latest adjustment eases an earlier directive for refiners to maintain output at around the average level of the previous two years, a measure introduced to safeguard domestic fuel supplies following disruptions linked to the Iran conflict.

Early in May, some refiners in Shandong had sought permission from Beijing to lower processing rates or suspend operations at certain units, sources said.

Even with the latest changes, production requirements will still be a burden for the sector, which is losing money ‌for ⁠every barrel it refines and would prefer to shut down altogether, said one of the two trade sources.