China’s private refiners seek Beijing approval to cut run rates as Iran war hits margins

Published Mon, May 11, 2026 · 02:53 PM

[BEIJING] China’s private refiners have sought government approval to cut oil-processing rates, a month after Beijing ordered them to produce at any cost in order to secure domestic fuel availability.

The processors – working through local authorities – have asked Beijing for permission to cut back as a war in the Persian Gulf drives up input costs and squeezes margins, people familiar with the matter said, asking not to be named as the request is not public.

The National Development and Reform Commission (NDRC), China’s top economic planner, told private processors in early April to keep production at 2025 levels at all costs. Beijing prioritises energy security and domestic fuel availability.

As a result of the measure, run rates soared in April to the highest level in almost two years and stockpiles of everything from petrol to diesel climbed – but refiners sank deep into the red. Many in and around Shandong, home to smaller operations, have been grappling with weeks of deepening losses.

The NDRC did not immediately respond to a request for comment.

Teapot refiners have a checkered history with authorities in Beijing. They have long resisted efforts to consolidate the industry, even in the face of poor returns – but they remain crucial to fuel security in times of crisis, just as they were during China’s economic boom more than two decades ago. BLOOMBERG