Key facts
- Independent refineries in Shandong province instructed to reduce output.
- Output cut to no lower than 80% of last year's monthly average.
- Directive impacts independent refineries, known as 'teapots'.
- This could lead to lower global crude oil demand.
This directive from Chinese authorities signals a potential shift in crude oil demand, as these independent refineries, often referred to as 'teapots', are significant consumers of imported crude. A mandated reduction in their processing could lead to lower demand for crude oil globally, potentially impacting prices. China is reportedly drawing down its oil stockpiles as imports have reached a decade-low, raising concerns about the global energy market.